Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Hansard source

The Morrison government might be too busy to go ahead and set up a proper integrity commission, one with teeth, which holds public hearings and can hold people to account for past wrongdoings, but it's not too busy to water down laws affecting business accountability. We saw some reasonable changes put in place during the pandemic, but now the government is looking to make those permanent and to take away the corporate accountability and directors' liability, which ensure that Australian firms do the right thing.

The government is claiming that there is an epidemic of class actions taking place in Australia, despite the fact that shareholder class actions make up much less than even one per cent of all cases filed in the Federal Court. They affect a tiny share of the firms who've done the wrong thing. Very few directors are sued in Australia, and yet the government wants to go ahead and make directors liability even lighter than it currently is. These moves have been criticised by a range of stakeholders. The leading investor body, the Australian Council of Superannuation Investors, has said that there was no consultation with major investors on the repealing of continuous disclosure laws. ACSI Chief Executive, Louise Davidson has said:

Continuous disclosure provisions are fundamental to market integrity and should not be diminished.

She goes to say:

Investor confidence in the Australian market relies on disclosures being accurate. These changes could undermine that confidence by providing protection for companies making poor disclosures.

Reducing accountability for poor disclosures is not the answer to addressing issues with class actions. These policy issues should be considered and addressed separately from the continuous disclosure and director liability regime.

That's from a body that represents $1.5 trillion of super savings. They have said that these changes will dent market integrity. Peter Morgan, the former head of Perpetual investments, said he was 'totally against any attempt to get rid of a physical AGM'. Stephen Mayne, who has been a regular critic of corporate mismanagement, has said, 'The physical AGM is the one day of the year where shareholders get to eyeball directors.' ISS has said it is a proposal that would 'stifle the questioning and accountability of boards'. As Stephen Mayne has pointed out, there is a significant risk of going to a fully virtual AGM approach. Damon Kitney, in The Australian, summed up the atmospherics at Crown's AGM. Following the devastating findings of the Bergin inquiry, Crown's virtual AGM was almost completely devoid of emotion. Crown's directors were back in control because questions were not asked in person. They were submitted in writing and they were read to the chair, Helen Coonan, by the company secretary, Mary Manos. As a result, shareholders didn't get to see the whites of their eyes, as Stephen Mayne has put it. They didn't get to question company directors in the way in which an in-person AGM would allow.

These changes mean that company directors will only be liable for civil penalty proceedings in respect of continuous disclosure obligations where they can prove the directors have acted with 'knowledge, recklessness or negligence'. These changes have been referred to as the 'honest idiot defence'. Damian Graham, who oversees $130 billion of assets as the chief investment officer at Aware Super, says investors rely on an informed market:

I would suggest we would prefer that the strongest disclosure regime was in place … As a principal, greater disclosure provides greater confidence and supports the highest level of efficiency of markets.

Maurice Blackburn class action principal Andrew Watson has said that securities class actions will become more difficult and has pointed out that in a given year less than two per cent of companies get sued for breaches of the continuous disclosure and misleading and deceptive conduct rules. So, as a result of the government's attacks on those bringing class actions, we are going to get less continuous disclosure as a result. As the member for Whitlam has said:

After the revelations about Crown Casino in the New South Wales Casino Inquiry, it is hard to understand why the Government is going down this path.

Shareholders are demanding more transparency, not less, to protect their investments and allow them to make rational decisions about where to put their money.

So these changes, if they're approved by this parliament, will allow dodgy directors to get away with not releasing crucial information to shareholders.

This is not just an issue that should affect shareholders. Australian firms are stronger and Australia is a more attractive investment destination when we have appropriate disclosure rules in place. These proposed changes put the interests of a handful of company directors ahead of the vast number of mum and dad investors. It's ironic that the coalition, which, at the last election, claimed it was the party of shareholders, is now limiting the ability of shareholders to keep directors in check. Australian Shareholders Association head, Allan Goldin, says: 'The new instruction to management from boards could be: "If you want to keep some information to yourself or exaggerate a bit, just make sure you don't tell me so no-one can sue me." This is a real danger.'

It's not as though we don't have significant problems in the economy. As Greg Jericho has pointed out, even prior to the pandemic, the level of prime age men working full-time was below the post-1990s-recession median of 74 per cent, let alone the mining boom peak level of 75.9 per cent. The current level is a full percentage lower than the pre-pandemic point, and since 2012 there's been a historically low number of men in this group working full-time. We have, according to Greg Jericho, still a significant drop in the level of hours actually worked, and we have an unemployment rate not forecast to return to pre-pandemic levels for years to come.

Even then, the government is too unambitious in its unemployment targets. We've had the Reserve Bank governor saying that he thinks full employment might be below four per cent, which would mean we need much more ambition to increase employment in Australia, yet we have two million Australians out of work or without enough work. Estimates from the University of Melbourne's Jeff Borland suggest that between 150,000 and 250,000 people could lose their jobs when JobKeeper comes to an end at the end of this month. The economy is a full one per cent smaller than before the pandemic. Even before COVID, growth was well below trend. Wages growth under the Liberals has been at record lows. Under Labor, wages grew an average of 3.6 per cent a year. Under the Liberals, wage growth has slowed to 2.2 per cent, and has recently fallen to all-time lows of 1.4 per cent. In real terms, many Australian workers are going backwards. They're seeing the buying power of their pay packet fall, because the Liberals have been focused on corporate profits rather than wages.

Again, we see that with this bill, a bill that tilts the balance away from the many and towards the few. It's always the way with the Liberals. They're always out there to ensure that the small number who receive profits benefit at the expense of the large number who receive wages. Again, here, they're looking to protect their mates. They're looking to protect the C-suite, the insiders, at the expense of the many more people who own shares.

This is in a context in which productivity is in the doldrums, in which household consumption is down and in which household debt is among the highest in the world. There are serious economic problems to be addressed. But the Liberals aren't addressing them. With this bill, they are simply doing the bidding of a handful of insiders, not dealing with the very real problems that Australia has.

This bill reflects the lack of ambition for Australia under the Liberals. If only we had a Prime Minister as ambitious for the nation's economy as he is for his own political career. If only we had a government interested in looking after Australian shareholders rather than watering down disclosure. As the member for Whitlam has pointed out, every shareholder who was told at the last election that the coalition was on their side now knows that to be a complete falsehood and now knows that this Liberal Party is a party that will stand up for the few against the interests of the many.

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