Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I speak in support of the Corporations Legislation Amendment (Financial Reporting Panel) Bill 2012. It gives me an opportunity—as this is the first bill I have spoken on that the parliamentary secretary has carriage of—to congratulate my good friend, the member for Oxley, on his overdue and welcomed elevation to the position of Parliamentary Secretary to the Treasurer, and I thank him for asking me to speak on the bill.

The Financial Reporting Panel was established with the best of intentions by the Howard coalition government, pursuant to legislation in 2004 under the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004. Small- and medium-size enterprises wish to avoid at all cost litigation. That is why so many of them engage, for example, in debt collection agencies and pursue all they can to avoid litigation. It has been my experience with more than 20 years as a lawyer that business does not wish to go to court if at all possible.

Governments of all persuasions set in place arbitration, mediation and conciliation mechanisms by which business can avoid actually going to court. One of the things established, with the best of intentions, was the Financial Reporting Panel as a third-party vehicle which small and medium enterprises could use if there were any issues concerning the application of accounting standards. It was thought that those SMEs would actually consult with the panel in relation to issues if they had disputes between them and ASIC, but that did not happen. This was put in place with the best of intentions, but it did not proceed. The panel commenced on 3 July 2006 and virtually nothing took place. For three years it heard no cases and it cost the Australian taxpayer $800,000.

I do not criticise the previous coalition government in relation to that. It was at the request of industry and stakeholders that that panel was established. In fact, when Treasury circulated in November 2011 a discussion paper in relation to this, 11 submissions were made and organisations like KPMG, Deloittes and Ernst and Young recommended, with some amendment, that the panel continue. Regrettably, despite, as the member for Casey said, a number of cases being referred to the panel, very little activity has taken place. In circumstances where we want to get back into surplus, where the budget is tight and where across the forward estimates we can save $1.2 million of taxpayers' money, I think the parliamentary secretary is to be commended for the decision that was made. There are a number of options that could have been undertaken—he could have retained the panel; maintained the current processes and powers; modified any referral process; or repealed it and closed it—and I think he chose the right path in the circumstances. It is not as if these decisions of the panel were actually binding from a legal point of view. They would have had to be accepted by the corporate sector and by ASIC. We are not leaving industry without the opportunity to refer this to some sort of arbitration or indeed to go to court in relation to these matters. It has always been the case that industry could have taken matters to court. Further, the International Financial Reporting Interpretations Committee is able to provide interpretations when issues in relation to accounting standards still remain on foot. Reporting entities and ASIC could have the dispute in relation to that and refer to that particular committee for consideration. I note there is a transitional provision so that the courts, if they are going to look at these types of things, can have regard to decisions and reports made by the panel prior to its closure. That is a sensible suggestion in the circumstances.

This is a non-contentious bill. Even the fact that there were only 11 submissions made on the Treasury website in relation to the consultation process indicates that it is not a controversial issue and it is a sensible way to maintain the taxpayers' dollars in the circumstances. I support the legislation.

See this speech in context