Wednesday, 24 November 2021
Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021; Second Reading
Speaking on the amendment, and of course the implications for the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 itself, I was, in fact, originally going to support this bill. I commend the Treasurer for his efforts to try and overcome some gross irresponsibility by major legal firms, in the main, but also other people who can see an opportunity for making an awful lot of money out of class actions and litigation and making a profession out of taking such money.
Having said that, I must reflect upon the fact that one of the greatest battles that has been taking place in my home state of Queensland has been over the taxis. We had 6,000 people employed in Queensland, and we've lost nearly 2,000 of those people who were employed in full-time employment, sliding into part-time employment with Uber. The major point with the class actions is: how do these people hit back? Nearly 2,000 taxi owners had licences worth $376,000. They'd mortgaged their houses to buy those taxis. They'd worked for decades in the mines, doing hard and very demanding work to save up to buy a little business. Some of the state governments in Australia made an effort to provide some sort of compensation, but in Queensland it was the brutality of a regime that is completely out of control. It's destroyed the taxis.
There's a message here for the people in this place. You think that you can just do that and walk away from the table. Well, there are certain people, like me, who you've done it to, and you think you can get away with it. I'm not going to talk about the Leader of the National Party who deregulated all of our farming industries, but his career in this place was destroyed. I'm not going to talk about the Prime Minister of Australia who cut off the live cattle exports and crippled the cattle industry—it may be the six biggest export industry in Australia—and brought it to its knees. I am not going to talk about the people that have done these things. In Queensland, the woman that was responsible for the taxis has been destroyed. I could argue that the Leader of the National Party, after deregulating all these industries, was destroyed. The Prime Minister was destroyed. So, if you think you can just do it to us and walk away from the table, I've got news for you, because our only weapon is to get even. Right? So you understand that when you do it to us we will attempt to get even with you personally. And, if that's a threat, I most certainly hope it's taken that way, and I would like you to record my own personal involvement in carrying out that to get square.
On my third week in parliament, the Leader of the Liberal Party and the Deputy Premier of Queensland destroyed 13 businesses in North Queensland. Well, unfortunately for him, four of those happened to be good friends of mine. But even if they had no association with me whatsoever, do you think you can just go and destroy people's lives and walk away? Well, I am sorry, because I'm not Robinson Crusoe. When I say, 'You don't,' you don't. We may not be able to get you and get square, but we will most certainly try—that we promise you. So do it, and do it at your peril. The lady who deregulated the taxi industry in Queensland has had her career destroyed.
I will proceed: the class action is the only weapon these people have. I don't know what happens in history in our schools, but we're not taught the fundamentals of freedom. The Magna Carta was one of the most important documents in human history, because up until then brutal war lords became kings and they did what they liked. In the Magna Carta, the people came together, under Archbishop Stephen Langton, and said: 'No, Mr King, you can't run around doing what you like any more. That time is over. We are moving into a much more civilised environment, so you can't go around destroying people's lives, burning their haystacks, taking their daughters, taking away their property rights or throwing them in jail without any due process of law. That ceases with the Magna Carta.' The history since Magna Carta has been a fight to keep those freedoms that we won on that day at Runnymede in 1215.
Let me return to the class actions. I represent 25, maybe 30, per cent of the electorate of Kennedy of First Australians, and I myself identify as a First Australian, and I speak often and continuingly. The welfare fund in Queensland was definitely used for purposes that may have been good purposes, but the welfare fund belonged to the people whose money had been taken and put into the welfare fund. A lot of people refer to stolen wages. There is no doubt whatsoever that the wages went into a fund and that fund went into the welfare fund, so the sons and daughters of the people that were owed that money never got that money. So they had a right to a class action, and they took it. The 'live ex' case, where the livelihoods of every single cattleman in Australia was put under threat with the ban on live exports to Indonesia, who have been wonderful neighbours of ours as a country. To have treated them so shabbily was a disgrace in itself, which former Prime Minister Rudd has commented on, and I compliment him for it. But in the live ex decision we had no redress. We just had our livelihoods destroyed with no redress. Well, we do have a redress: the class action. Our First Australians have a class action; our cattlemen have a class action.
Powerful corporate interests wanted the South Johnstone Mill. The accounting firm, of course, was in bed with them and the various other corporate bodies. The South Johnstone Mill had got into trouble because of extraordinary cyclonic weather—and I won't go into that. But they sold the mill out from under the owners for what was effectively $2 million, if you took out the cash in the bank and liquid assets and a number of houses they owned that they didn't want and didn't need. If you took that out then the mill was sold for $2 million—a mill that's worth, if you want to build that mill, $200 million. The cost of building or replacing that mill is $200 million. It was sold two years later, by the people who'd indecently, improperly and illegally seized ownership of that mill, for $70 million, and yet the owners, the farmers, got $2 million out of it.
Well, there is the class action. You think you can get away with it? God bless Magna Carta. God bless those men who died to deliver these freedoms and rights to us. The class action is our way of getting back. We congratulate the people in the taxi industry in Queensland, who haven't lain down and copped it but have fought back relentlessly. I deplore the courts of Australia because they simply don't understand Magna Carta. The government is an entity. It is the same as any other entity. The government—not the parliament but the government—stands in a legal situation in the same way as any other entity—me, you, Mr Speaker, or a corporation, or any other entity. And if they do something that harms and damages people then the people have a right to hit back, and that's called a class action.
The Treasurer is acting with the best will here, and I praise him greatly for trying to overcome some of the excesses and bad aspects of class actions, but I am afraid I just cannot be part of cutting down our rights to our only pathway of redress, the class action. Look at all the great commentators on democracy, such as Locke and de Tocqueville. De Tocqueville's famous book on the tyranny of the majority, and the works of people like Locke, are referred to continuously by commentators on democracy. De Tocqueville said that democracy is not a just system and it's not a fair system; it is simply the rule of the majority, and that can be very oppressive, and there must be restraints upon the rule of the majority. People must have rights.
I have always opposed a bill of rights because I think it gives outrageous powers to the judiciary. All I can say is that I think the High Court under Brennan and Kirby did a wonderful job. I think they understood the separation of powers. They understood Magna Carta. They understood that the rights of the majority and the power of the majority, through a democratic system, are restrained by our own personal freedoms and rights, including property rights. They understood that. I don't think the current High Court understands that at all.
Let me return. This legislation is to protect big corporations. This legislation has come from big corporations. Thanks to the free market policies of that side of the House and that side of the House, almost every big corporation in Australia is foreign owned. So if you take the money off the taxi drivers—if you take $200,000, $300,000 or $400,000 off the hardworking owner-operator taxi drivers—and hand it over to a foreign corporation then history will pass a judgement on you. And every state government in Australia did exactly that. They are the handmaidens of the big corporations. Uber, a foreign corporation, wanted the control and they got it, at the cost of the poor, hardworking owner-operator taxi drivers, who had hocked their homes and borrowed to the hilt to buy a taxi licence.
I represent the aspirational classes. Most of the Kennedy electorate would work in the mines. They are not there to be proud members of the working class, no; they are there to better themselves and better their families. They would work in the mines for 10 years, seven years, six years—sometimes they could work for three years and they'd buy a newsagency. The newsagencies are gone; Woolworths and Coles have put paid to them. They'd buy a supermarket, but they're gone; Woolworths and Coles have taken them out. They'd buy a taxi, but they're gone; the state governments have destroyed that. They'd buy a prawn trawler. Well, you have destroyed that industry completely, both through greenie bans and the deregulation of the fishing industry in Queensland.
All those owner-operated businesses that we aspired to have when we worked in the mines in temperatures that were unbelievable and did jobs that were unbelievable—and I will just go sideways for one moment.
We're talking about class actions. You take away the class action, and the people have no redress against government, which is often the handmaiden of big corporations. I'm talking about the people who worked hard to better themselves, and all those opportunities have been destroyed and taken away from them. In the taxi case, we have a class action. Particularly with the state governments in Victoria and Queensland, I deeply regret that their courts just don't seem to understand the separation of powers. They seem to think they're there to service the state government. I mean, they appointed me and they pay me, so who do I work for? (Time expired)
I rise to support the second reading of the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. Of course, I don't support the amendment. This is a very important topic, and I would like to start by commending the contribution of the member for Mackellar yesterday on this bill, and I associate myself with the remarks he made.
When it comes to this topic, I'm reminded of when former Prime Minister John Howard talked about the fondness we have for the people of the United States but said there are some things about the United States that we are pleased don't occur in our country; he often uses the experience of firearms control. When it comes to this debate, I would like to say that I hope we don't, in this country, end up having a judicial system that in any way mirrors that of the United States. In particular, we don't want to have a system where people are profiteering from the judicial system; we want it to be founded and grounded on the basis of equity and serving the cause of justice and nothing else.
This bill is about addressing something which is seeping into our judicial system—that is, people seeking to profit, earn money, from financing actions in and through our courts, not necessarily with the best intentions of the plaintiffs who may well be aggrieved and entitled to recompense through the justice system. One of the most awful experiences we have as members of parliament in dealing with constituents is when matters to do with family law come to us as individual circumstances. I've had a few times just in my two-and-a-bit years as a member where a few people have come to see me, as their local member, who have been through a family situation like a divorce. Before their financial situation is settled the entirety of their fortune as a couple has been expended on legal processes to try and settle their matters—so, in effect, they have virtually abandoned the course of action through the courts because there's no money left to fight over, if you will. That's one of the disappointing areas of our judicial system, that people spend more than the value of money that they are disputing on the cost of disputing it.
When it comes to class action litigation, I reassure the member for Kennedy, though he has left the chamber, that in no way, in my reading of this bill, are we outlawing class actions or the right to take class actions, and I'm pretty confident that constitutionally we wouldn't have that power or jurisdiction anyway. What we are talking about is the way in which we regulate people that finance class actions.
Let's just reflect on this business model for a moment. These people, in many cases overseas entities or entities that are registered overseas, who go out in a marketplace to investors and say, 'Donate into this fund that we are going to use to finance legal action in a particular class action matter, in Australia, and if we are successful, this is the return we think we can get you on the money you plan to invest.' So, effectively, they are spruiking a circumstance where, if it's genuinely a matter that requires justice and determination in the courts, and saying, 'Let's go and profit on this. Let's go and invest money in the cost of litigation and, if the determination is in our favour, you are going to get your money back and more.' If they happen to succeed in their objective of financing a successful case, they of course, through the contract that they have put in place with the participants in the litigation, receive, in some cases, a very significant share of the determination that was made in their favour by the courts for the benefit, in theory, you would hope, for the plaintiffs that have been wronged if that is what a court holds and finds.
In that circumstance, if there is a determination in favour of a class of plaintiffs that a court has made that they believe is fair compensation for them in exchange for the wrong that they have endured, they don't get what that court has decided and believes is their just entitlements to create recompense for how they have been wronged, because, once that determination is made, if they have been financed by one of these litigation funding schemes, then of course the determination in their favour is subject to the clipping-of-the-ticket by the people that have stumped up the cash. So they might go out and find a category of people who not only are worthy of taking action but also for whom the courts may well find in their favour, and they are worthy and it is just that they receive compensation, but they never receive anything like the compensation that our judicial system determined they were entitled to as recompense for how they were wronged, because someone else has come in and pulled them into this circumstance where they sign up to, and have to agree to, forgo parts of their compensation to the people who are financing the scheme.
This legislation isn't even saying that we're going to shut that down. What it is saying is that we need to put much better restrictiveness and regulation around these practices. And I can't for the life of me understand how anybody in this chamber, particularly people who purport to represent and stand up for working-class people, would be against us trying to protect the just return from a judicial settlement going to the plaintiffs that the judicial system has determined have been wronged. I cannot for the life of me understand how that, as a principle, is something people are against.
So what are we talking about? We're talking about courts having the ability to limit, look at and consider some of these shady contracts that vulnerable people are asked to sign up to, probably not ever fully understanding the consequences of what they are committing to, and giving the courts the power—like they have the power to make all sorts of other determinations in cases, whether or not they are class actions—to consider and look at some of these litigation financing structures and contracts that are put in place and have the ability to have some jurisdiction and put some limitations over them.
I think this is very important. I think it is fundamentally unfair, if a court determines that someone has been wronged and is entitled to compensation for the wrongdoing against them. That goes through proper and appropriate courts, structures and appeals mechanisms within our judicial system. At the end of that process, if the judicial system has determined they are entitled to, and should have the right to, a certain compensation, they then get a small percentage of what the judicial system believes is justly theirs for what they have gone through and taken action over.
We're trying to put some boundaries around that. We are talking about some very vulnerable people. The member for Kennedy highlighted some examples of class actions. I'm not sure they were necessarily litigation funded and would be relevant to the provisions of this bill, but I take his point, in a very general sense, that there are vulnerable people in our society who are absolutely entitled to come together as joint plaintiffs and take action. In no way is anyone suggesting that we want to put any restriction or limitation on that—and, as I said earlier, I doubt we would even have the power or jurisdiction to do that, constitutionally. But of course it is important when there are large groups of people who are all equally affected. Some of the more common examples, apart from those used by the member for Kennedy, are wage cases. It might be that a whole group of employees may not have been adequately compensated by their employer. Some shortcomings in payroll systems or what have you, whether intentional or not, might have been identified, or appropriate award conditions might not have been not applied. This may be something that the company disputes and it may be that it needs to go to court for resolution. At times, that might affect dozens, hundreds or thousands of people.
Obviously, it would be patently ludicrous to suggest that we think each individual person affected should have to individually litigate those matters. Hence we have the concept of class actions, a thoroughly sensible and important right that we have in our legal system. No-one is disputing that principle and no-one is saying it is not very important. But, equally, we don't want to have unregulated exploitation of those people. The irony, given that they're being approached to seek to right a wrong that they have purportedly suffered, is that at the end of that process, having been pulled into a scheme and financed by people, potentially offshore sources of finance who have got a profit motive—they are adopting and bringing together investors and saying: 'Hey, put your money in here. You're going to get more back in return. We're going to identify cohorts of people and tell them they've been wronged. We're going to launch litigation.' When they're successful and have their successful day in court and the court says: 'Yes, you were wronged. Yes, you are entitled to financial compensation. We determine that the value to compensate you is this,' and the court makes that order, these people come back and say: 'Congratulations on that excellent settlement. Most of it we're taking from you. I don't know if you read the fine print on page 342 of the agreement we asked you to sign when you became a co-plaintiff in this class action, but we tipped in the money to finance this litigation and, now that we have been successful, the huge majority of the settlement is coming to us. We're profiting, and you're not, even though, under our justice system, rather than this being profit, this is in fact compensation that you are duly entitled to.'
We shouldn't stand for that in this country. We shouldn't stand for that sort of exploitation of vulnerable people. And we shouldn't stand for the principle that, if our court system has determined that somebody is entitled to compensation, it should be possible for them to receive barely any of the compensation that our court system has determined they should receive. It is absolutely appalling and outrageous. In some cases, the people who are propagating these schemes are doing it wilfully knowing they are going to succeed and deny the proper and full compensation that the people they are pulling together under these schemes would otherwise be entitled to through the court system. They're effectively saying: 'We are really confident that these people deserve financial compensation for something that's happened to them. Let's get a group of investors together and go and exploit them. Let's go to them and say: "Hey, we will take care of this for you. You sign up to this scheme we've got, we'll pay the bills, and when you're successful, we won't tell you until after the result that the justice we promised to secure for you and the financial compensation for that justice is largely going to be eroded away by the fees that we take in exchange for us coming along and purporting to make your life easy by managing and handling this matter for you."'
We are in a situation where this is a growing sector, unfortunately. It is interesting to see the advertisements on the television. Advertising on TV is not cheap, but these people are very rich people, and frankly they have become rich by exploiting vulnerable people in our society, so they can afford to run television ads and they can afford to campaign and lobby. That should really say it all. Why don't they want this bill to pass? Because it's going to end their profiteering of vulnerable Australians. It brings the scams to an end. It means there is actually proper regulation of their activities, and it means that we are protecting vulnerable people from being exploited.
We have a circumstance where there is a bill before the parliament to protect exploited people, and, potentially, some members of this chamber are not supporting that, which says a lot. It says a lot and it is very disappointing. Nonetheless, I have confidence that not only will it pass this House but it will be passed by the parliament, because the fundamental value here is honouring and protecting vulnerable people and the Australian justice system. If we pass this bill, it will have been a very good day at the office for all of us in this building. I commend the bill to the House.
I rise to speak on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 and to support the amendment moved by the member for Whitlam. The Joyce-Morrison government and all the speakers that have trotted out on their behalf say that the purpose of this bill is to protect the interests of plaintiffs in class actions. That is the furphy being peddled by the coalition. They say that they are all about protecting the exploited. There's no suggestion that people are adults able to enter into contracts with a law firm funded by financial backers, and no suggestion that they have the freedom to enter into that contract. For some reason, when it comes to this type of freedom, legal freedom, Australians are to be treated like they are children. The Morrison-Joyce government is here to rescue these poor exploited people who do not have the ability to enter into a contract by themselves.
They clearly say that that is the intention of the bill. But, like most things that the Morrison government says, you have to have a look at the fine print to get to the real story. What they actually want this bill to do is to make it more difficult for people, everyday Australians, to bring class actions. The Morrison government is trying to protect wealthy and powerful defendants. This bill was the subject of a short inquiry by the Parliamentary Joint Committee on Corporations and Financial Services. One submitter to this inquiry, Phi Finney McDonald, said:
That the Government is seeking to present this reform as a consumer protection measure is Orwellian gaslighting.
Further highlighting the idiocy of this legislation is that it is opposed by leading class action defendant lawyers at Herbert Smith Freehills.
Don't be fooled by another Orwellian title trotted out by the Morrison-Joyce government. Like many bills we have seen the coalition ram through this parliament, this bill is friendless.
One of the new requirements this bill will implement is that class members agree in writing to be members of a litigation-funding scheme and to be bound by the scheme's constitution. This will mean that, for a funder to obtain a fee from a claimant, the claimant must be a member of the funding scheme. This is a departure from the current opt-out model, where individuals who do not wish to participate in a class action have to opt out. The current model and its advantages are summarised by the Law Council in its submission as follows:
15. Part IVA of the Federal Court of Australia Act 1976 … which contains the federal class action regime operates on the default basis of an opt-out structure. Under this system a class action can be commenced without the express consent of group members … Instead, the class action defines the group … and then a court-approved notice is given to group members advising that they may exclude themselves from the proceedings by advising the court … The opt-out class action is also referred to as an open class action.
16. The opt-out structure was recommended by the Australian Law Reform Commission … because it promotes access to justice and efficiency.
Take note, those opposite: it promotes access to justice and efficiency.
Group members who cannot be identified at the outset or who are unable to elect affirmatively to participate due to social or economic barriers are not excluded from the legal system and a potential remedy. That is particularly important for large classes of potential claimants in—
I say this for the National Party—
rural, regional and remote, Aboriginal and Torres Strait Islander and/or culturally and linguistically diverse communities and for those with disability. The opt-out approach also promotes efficiency by including all group members at the outset and binding them, unless they opt-out, to the outcome of the proceedings …
The committee, even in its short inquiry, heard overwhelming evidence that most of the measures in the bill that the Morrison-Joyce government has brought to the chamber would leave class action plaintiffs and defendants significantly worse off. For example, the dissenting report from Labor members of that committee said:
So here we go. The party that once upon a time used to believe in free markets and free choice and individual liberties is suddenly going to drive up legal costs and make the avenues available for the vulnerable less attractive. The dissenting report continues:
Imagine being the insurance company for those companies.
There are other concerns about the process in bringing this bill before the parliament. Instead of preparing a comprehensive regulatory impact statement in relation to this bill so that the Treasury and government can understand the regulatory impacts on business, the Treasury certified a report by Liberal members of the parliamentary committee as being an independent review. I kid you not. That is actually what happened in 2020 and 2021 in this parliament. I will just make this a bit clearer. The Department of the Treasury officials certified a report written by Liberal MPs as being independent and then used that report as the primary justification for a Liberal government policy. You wouldn't do this in a dodgy dictatorship, never mind a healthy democracy like Australia. This is unbelievable. It's astounding that that would happen. There are processes to ensure that the parliament knows the impact that bills will have on the wider community and the economy. The Morrison-Joyce government, the car park rorts people, the sports rorts people, the Leppington Triangle land people—those people—have basically said: 'We know better than the public officials. Just believe us. We got the car parks right, building car parks outside train stations that are going to be closed down, and paid way over for land for an airport.' Unbelievable!
There are also some constitutional issues surrounding this bill. The Law Council, former Solicitor-General Justin Gleeson SC—widely respected—and other legal experts have concerns about the constitutionality of this bill. Some of the concerns raised include whether the corporations power in the Constitution, section 51(xx), and/or the referral powers to the Commonwealth can support the provisions; whether the provisions would amount to an inconsistency with state class actions provisions so as to override them pursuant to section 109 of the Constitution, including impacts on the group costs order provisions unique to the Supreme Court of Victoria; and potential issues arising in respect of overriding the power of state courts or directing state legislatures. The Morrison-Joyce government has not addressed any of these concerns either in the explanatory memorandum or through the Attorney-General's Department when questioned about these concerns during the inquiry process. There has simply been no explanation or assurances that this bill is constitutional. One would think you'd get your house in order before trotting this into the chamber. The Attorney-General's Department itself appeared to harbour some doubts when questioned during the inquiry process.
Justice Beach of the Federal Court of Australia referenced this bill in a recent judgement in Stanwell Corporation Ltd v LCM Funding Pty Ltd. It considered whether a class action brought against two Queensland state owned coal-fired power companies was grandfathered for the purpose of the Corporations Amendment (Litigation Funding) Regulations 2020 from a requirement to be registered as a managed investment scheme. The judgement made some important comments about this bill. At paragraph 19, Justin Beach referred to a previous decision which characterised a particular litigation funding scheme as a managed investment scheme. He said:
… it is arguable that the majority mischaracterised litigation funding arrangements as an investment by group members of property to achieve benefits, when such arrangements principally provide a mechanism for persons who share commonality in their unlitigated and separate choses in action to secure the payment for legal services necessary to vindicate those choses on a contingent basis.
At paragraph 218 Justice Beach also said this bill:
… may need to be modified to bring its scope within the referral contemplated by paragraph 51(xxxii) of the Constitution bestowed by the States under the Corporations Agreement 2002 (as amended), assuming that the approval of the Forum constituted thereunder has not been sought, and also assuming that the concept of "managed investment schemes" under clause 507(1)(a) is limited to its objectively ascertained meaning as at the inception of that clause, which pre-dated Brookfield and was also not affected by or considered under the 2017 amendments. It may need to be modified to address direct or indirect conflicts with the provisions of Pt IVA of the FCA Act or at least to deal with the arguable conceptual incoherency in seeking to shoe-horn the statutory model for managed investment schemes under the Corporations Act into a funding mechanism designed to facilitate access to justice under the open class regime enshrined in Pt IVA, where class actions are controlled by representative applicants, with external legal representation and advice, and by the Court, rather than by group members exercising their democratic rights under a so called managed investment scheme, or by funders or any other entity expediently nominated as a responsible entity.
This is an important judgement that provides reasoned commentary about the bill that is now before this parliament, commentary that has not been addressed by the Attorney-General or by the Morrison-Joyce government in any way from the speakers I have heard on this issue.
These issues are not theoretical. This bill would have real-world impacts for Australians. Litigation funders and plaintiff law firms gave evidence to the committee inquiry about class actions that would not have taken place if the Morrison-Joyce government had had their way and got this legislation through. Let's look at them. Mervyn Street v State of Western Australia, known as the Western Australian stolen wages class action, was a class action involving thousands of Indigenous Australians in Western Australia whose wages were unjustly withheld or not paid, as a result of wage control legislation in effect until 1972. Imagine if that had not run. Eileen Cummings v Commonwealth of Australia was a class action involving stolen generations survivors. Imagine being the Attorney-General that stopped such an action. Gregory John Lenthall and another v Westpac Banking Corporation was a class action alleging that Westpac overcharged its life insurance customers. I will touch on that in a minute. Hudson against the Commonwealth was an environmental contamination class action against the Commonwealth of Australia and the Department of Defence relating to chemical contamination at the Army Aviation Centre at Oakey in Queensland, which resulted in diminution in property and business values. Those PFAS cases would not have occurred if the Morrison-Joyce government had their way. Riley Gall v Domino's Pizza Enterprises was a class action brought on behalf of delivery drivers who allege systemic underpayment relative to award entitlements. That would not happen if the Morrison-Joyce government had their way.
Some of the speakers opposite obviously have not practised as lawyers. That's fine. We need a wide range of people in this parliament. That's important. When I was elected, 14 years ago today, 40 per cent of the parliament had a law degree. I had previously worked at Quinn & Scattini, not in personal injury law but in commercial law. That law firm, now Ryan Murdoch O'Regan, dealt in this sort of matter. I need to stress to those opposite that no lawyer can charge for work that they do not do. No lawyer gets paid for an hour of work that they have not properly billed. The previous speaker talked about shady contracts between people, when, really, this is all about protecting the wealthy from the actions of those who need someone to speak up on their behalf. I urge the parliament to support the amendment moved by the member for Whitlam.
It's quite extraordinary. With all of the issues that Australia is facing today, all of the urgent matters that this parliament should be addressing and that this government should be addressing, apparently the most important thing on the Morrison-Joyce government's agenda today is stopping people who can't afford to pay a lawyer being part of a class action so that they can get justice. What is their motivation in doing this? Who is the Morrison-Joyce government standing up for by trying to limit the ability of people who are damaged and have a legal right to claim damages—but can't afford the justice system to be able to do so—to get representation in a class action? Who's interests are they really looking after? We know the first interest they always look after is their own. I called it the Morrison-Joyce government, but let's be fair: in the last month or so it's clearly been the Joyce-Morrison government. We know that everything they do is through the prism of trying to get themselves votes and trying to get themselves re-elected. The least the Australian population deserves is a government where everything they do is through the prism of making Australians' lives better, but that is not what they have with this government.
This legislation, once again, is evidence that the interests that this government defends are their own and their rich mates'—not the people in my electorate who need to be part of a class action to hold corporations and institutions to account for systemic damage that they have caused. This Morrison-Joyce government is not on the side of Chrissy Stewart, who emailed me last Friday. She is a client of Shine Lawyers as part of their recent class action against Johnson & Johnson for the Gynemesh. That is such an important class action. Women's health in this country, for too long, has been second class, and here we have an action for women who have been damaged and are seeking health support, and it's exactly the sort of thing that this government wants to shut down. Chrissy emailed me and said: 'I don't know about you, but this Morrison government are totally disrespecting the Australian people. As far as I can remember, they never went to the last or past elections telling of their intention to do this. This is wrong and so disrespectful. I, like many Australians, do not have the funds to take action when things go wrong. I feel like we are getting more and more like America—just look at the proposed electoral changes they want to bring in.' Yes, Chrissy: just look at them. That's the next bill that this government wants to debate—restricting people's ability to vote. Chrissy goes on to say: 'It's wrong, wrong, wrong. To me, Morrison and some of his counterparts are treading all over us. We are being treated as second-class citizens. I am praying that they won't get back in.' There is a message for you, Prime Minister. There is a message for you, Treasurer. There is a message for you, everyone on that side of the chamber who is going to vote for this legislation. People like Chrissy from my electorate can't afford to take on a giant like Johnson & Johnson. They need to access class actions to get justice.
There are many problems in our legal system that need to be addressed, starting with a family law system that seems to heap more pain and more damage on vulnerable children and vulnerable women at some of the hardest times of their lives. The response of this Morrison-Joyce government has been to abolish the Family Court to make it harder for them. They are going to community legal centres, which operate on the smell of an oily rag to help the most vulnerable people in this country and cannot for the life of them get this Morrison government to fund them to deliver the services that are needed. People who have had their lives impacted by somebody's actions against them too often decide not to go to court to pursue their lawful remedy because of the costs of going to court, and the delays of the systems that are straining under underfunding and systems that are archaic and haven't been updated, in the end, wear people down and they just let it go.
There are so many things in our legal system that, if it really cared about justice and access to justice, this Morrison-Joyce government could be looking to improve. And what they choose is this piece of legislation to limit even further people's ability to get justice. I'm tempted to say it's extraordinary, but sadly it just seems to be par for the course for this government. As we have come out—or are coming out, we all hope—of this pandemic, as restrictions are easing, we know that there are going to be more and more people who are going to need to access the legal system as a result of being victims of domestic and family violence. The deputy speaker in the chair—the member for Macarthur—and I are on the social policy and legal affairs committee of this House, and we held an inquiry into domestic violence during most of this pandemic. Every single witness who works in the system—from counsellors to people who work in housing, people who are victims of domestic violence, community legal centres and advocates—told our inquiry that instances of domestic violence went up during the lockdowns and restrictions and that, in particular, women's ability to access services went down. That was partly because of the restrictions that meant they couldn't go out and access services and partly because for public health reasons they were locked in their homes with their perpetrators. Every one of those witnesses told us that they anticipated an increase in the need for their services when restrictions were lifting.
So one would have thought that an urgent matter for this government to bring to the parliament would be an improvement in the ability of those vulnerable women and children to access legal services and support services. One would have thought that the urgent matter that we should be debating today would be how much extra money and resources should be put into community legal centres, legal aid commissions and the family and Federal Court system to deal with the anticipated increase in matters—but, no. It's difficult to know whether to be angry or just deeply disappointed at the priorities of this government. Perhaps they don't think that there are enough votes in standing up for vulnerable people. Perhaps there are not enough political donations for them in standing up for vulnerable people. But that is what we are here to do.
People with money, people who are privileged—like those of us who are members of this parliament—and companies that are massive international corporations and have lots of money are doing okay. The people who need a voice are the people who have lost their jobs or who are working in low-paid, insecure employment; people who have children with disabilities; people who are in violent or coercive relationships; people who haven't got enough money to buy a home and are in long-term rental and have discovered that their rent has increased exponentially during the recession; people whose public school is crumbling down around their ears and who look five kilometres up the road at private schools that have swimming pools, Olympic running tracks and wonderful STEM centres; and people who work two or three jobs to make sure that their children have food on the table and can get to school the next day. They are the people who need a voice. They are the people who need a government that says, 'I know how hard life is for you and has been for you, and my priority is to help you so that your life, your children's lives and your community's life can be better.'
If we have ever had an opportunity in our generation to say, 'Here's a reset for our country; here's a time when we can say, "What are our priorities? What do we value? What do we want the future to look like for our children and our children's children?"' surely it is now. Surely, as we have grappled with COVID and we are coming out of a crisis, that is the opportunity for the parliament and for the government to look to a better future. We know that this Prime Minister likes to use a lot of words about rebuilding and coming out of this pandemic, but where is the evidence of the commitment to that? Where is the program of saying, 'As we invest in infrastructure, as we invest in manufacturing, as we build a renewable energy base that makes us a superpower, reduces emissions and helps us to have a future where the planet isn't destroyed, we're also looking to those people who have done it the hardest, we're also looking to those people who are most vulnerable and we're also looking to those communities where intergenerational poverty and socio-economic disadvantage are holding them back,' and saying to them: 'You are our priority'?
What Australia deserves is a government that's on their side, that's on everyone's side and that says: 'As we look to economic growth, we look to economic growth that benefits everyone. As we look to the future, we're going to set ourselves benchmarks. We are going to say that we have a legal system and a justice system that everyone can access, no matter how much money they earn and no matter where they live. We are going to look to a manufacturing base that means that we have sovereign capability and supply chains in this country and that we are investing in sustainability for now and for the future. We're going to have a health system which means that it doesn't matter how much money you've got on your credit card; it just matters whether you have a Medicare card so that you can get help when you need it—the best help.'
What are the priorities of this government? I don't know how many times I've stood in this chamber, having written to the minister for health, and said that in my electorate bulk-billing GP clinics can't get and keep doctors, which means that people in my community who can't afford to pay out of pocket to go to the GP get compromised health care because they can't get to a GP. Why aren't we doing something in this parliament today and debating legislation to fix that instead of debating legislation to make it harder for that same cohort of people to access the justice system? How many times do we have to stand in this chamber and say that the public education system should be the gold standard of education in this country, that every child should get the best education possible and that every educator in the education system should get all the resources they need to deliver that education? Why aren't we talking about that and debating that right now instead of legislation to make it harder to get justice? This Morrison government is not on your side.
I rise today to speak on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021, and it's an honour to follow the member for Dunkley with that impassioned speech. I wish I could speak like that. This bill attempts to set limits on litigation funding schemes, which are used to bring forward class actions in our courts. It would do this through two main mechanisms. The first provides that a court must approve or vary the distribution of proceeds of a claim so that the distribution is fair and reasonable. Where more than 30 per cent of the proceeds will go to lawyers, class action funders or other nonmembers of the action, the bill will require the court to hold a hearing on the distribution of funds. As a result, the funding agreements made between class action funders, lawyers and plaintiffs prior to court action could potentially be altered. The second mechanism would change the opt-out system to an opt-in system for gathering plaintiffs into class action groups. This would mean that, rather than being an automatic beneficiary of a successful class action, potential plaintiffs would need to formally join the class action before it gets to court.
Labor will oppose this bill. This bill makes plain the government's hostility to those in our community who seek justice via class action lawsuits. While the stated intent of this bill is to protect the interests of such plaintiffs, it is clear that the setting of the limits does the exact opposite.
One of the huge issues we have in this country is access to justice. The Australian legal system is so incredibly prohibitively expensive, to a point where, for almost everyone, going to court is not an option. Every year, community legal centres turn away over 160,000 people who need help. A similar story exists for legal aid services. It's what leads to what many in the legal community call the missing middle. Class actions help to address this. They allow those who have been wronged to join together and assert their fundamental legal rights. They allow justice to be done when it otherwise wouldn't be.
There are reforms to class action suits which need to be done, but this is a bill that misses the point entirely. A submission to an inquiry into this bill put it very clearly, saying:
That the Government is seeking to present this reform as a consumer protection measure is Orwellian gaslighting.
Indeed, the so-called inquiry revealed a lot about the serious deficiencies in this bill and the government's attempts to cover them up.
Just one week was given to public engagement so members of the community could make submissions—just one week for this very important change that will impact so many. The government tried to pass the inquiry off as independent, despite the fact it was partisan. When a government engages in these clumsy attempts to hide its intentions and smother dissent, it is a red flag that something is seriously amiss. And that is the case with this bill. This disgracefully-short public consultation period has rebounded on the government. Rather than muzzling discontent with the changes, the majority of submissions to the inquiry made clear that the effect of this bill is to jeopardise the interests of both plaintiffs and defendants. That's right: the effect of this bill would jeopardise the interests of both plaintiffs and defendants, and not, as the government's title claims, 'protect' them. This was the view of both the plaintiff lawyers who bring class actions but also the defence lawyers. Both groups are speaking up against these changes, proof that the government has an active campaign against class actions. The fact is the government doesn't want to protect plaintiffs. Instead, it wants to protect wealthy and powerful defendants. This will impede the quest for justice for those who have been wronged, for example, by the actions of a large corporation. And, where an action is successful, they will limit the financial penalty on those who've been found to be responsible for causing harm. That much is plain.
The Australian Law Reform Commission recommended the current opt-out system. It refers to the system as open class actions, which is a good term to use, because this system opens class actions to anyone who may have been wronged. It is difficult, if not impossible, to identify every affected individual in a class action because of the large number of potential plaintiffs—for example, the class action by thousands of Australian women who took on and won against pharmaceutical giant Johnson & Johnson over the side effects from pelvic mesh implants, including chronic pain and infection. The Federal Court found Johnson & Johnson had been negligent and driven by commercial interests. It was ordered to pay $2.6 million in damages to three women who were the lead applicants in a class action of thousands of women affected by the implants.
Another example is the class action against the Morrison government over the shameful and illegal robodebt scheme. This action was made up of 430,000 members. The effect of this bill would have required every single one of them to be identified and for them to opt in to the class action in order to benefit from the $1.7 billion the Morrison government paid in restitution. In essence, the Prime Minister ripped off 430,000 Australians who, in response, took him to court and won. But rather than admit fault and learn from this embarrassing incident, the Prime Minister is now trying to convince us that this bill is about protecting the interests of people, just like those 430,000 people who, through the courts, just made him pay $1.7 billion!
We have seen this time and time again, that this Prime Minister is driven by revenge, and this will affect some of Australia's most vulnerable and powerless people. Each and every one of those 430,000 people illegally indebted through robodebt was, or had been, living on a low income. Many would have been members from some of our most remote, linguistically diverse and disadvantaged communities.
To obtain the written opt-in consent of all of those 430,000 people would have been inefficient, unworkable and unjust. Thousands could have missed out on justice and missed out on the money Scott Morrison's government owed them. But this is the actual goal of this bill, not just some unintended consequence. This bill will punish litigants like the robodebt plaintiffs, not protect them. It will punish anyone else with the misfortune of living on a low income who has been wronged by powerful corporate or political interests. But plaintiffs are not the only ones who will be disadvantaged by these arrangements; open class actions benefit defendants too. It is in their interests to defend a single claim. Closing off potential plaintiffs to a particular class action doesn't remove their rights to justice forever. It is conceivable that, under the system, defendants could be forced to fight near identical litigation claims multiple times over the same single event. Our courts are already under pressure with backlogs and delays. That was not helped when the government abolished the world-renowned Family Court either. Every attempt should be made to address delays in justice, but this bill, which would create closed class actions, would only heap more pressure on the courts.
This bill will also create other barriers to justice. The cost of class actions will be driven up by giving courts and so-called external contradictors a say in how funds are distributed among plaintiffs, class action funders and law firms. This bill will drive the efficiency out of existing arrangements, create uncertainty and introduce ambiguity into funding agreements. Confusingly, the government argues that creating more legal argument and more discretionary powers of the court will somehow resolve legal uncertainty for plaintiffs. But, as multiple submissions to the inquiry into this bill point out, this is simply not the case. Adding more voices, more opinion and more processes to anything only complicates it, and in the law complications mean greater costs. The changes to funding processes contained in this bill will not protect plaintiffs—far from it. They will instead deter them and their supporters. If they proceed, the changes will work against a quick resolution by fouling the potential for dispute settlement. Litigants on both sides will be dissuaded from seeking an agreement if the distribution of proceeds from an out-of-court settlement is uncertain and open to challenge after that settlement.
This bill is just another example of this government's shameful record on reforming our legal system, and just another example of this government's shameful record on always attacking the most vulnerable in our society and never standing up for those who most need the support of government. This is a government that is opposed to accountability. This is a government that tries to avoid dissent or debate at any turn. This pathetic one-week inquiry into this bill when it's going to have such impacts on so many people, mainly disadvantaged people who can't afford our incredibly expensive legal system—yet more people will be disadvantaged by this bill and unable to access justice. That is a disgrace, and Labor will stand up against this. Labor will oppose this bill.
To think that this government brought that disgraceful and illegal robodebt scheme, chasing up minimal debts, often wrongfully, from some of the poorest people in this country years later, driving people to extreme anxiety and, in devastating cases, even suicide. This scheme was found to be illegal, and, instead of recognising that, having been found by the court to need to pay back 430,000 people who were wrongfully targeted by this scheme, this government brings in a bill to make it harder for people, particularly those without the means to take on the legal system, to bring class actions. We're seeing that both sides, both plaintiffs and defendants, are not happy with what's in this bill. It's a bill that's trying to make it harder for people to bring class actions. The only people this protects are wealthy defendants and large corporations, who will be able to get away with things because people won't be able to come together—people who on their own wouldn't be able to challenge these issues in court. This will make it more difficult for them to get together and bring a class action that could expose the wrongdoing of wealthy and powerful corporations and others who already have the advantage in our legal system because of the sheer costs that prevent most people from accessing justice.
We're seeing community organisations and legal aid turning away people that desperately need help—more and more people every year. And this is what this government comes up with in an attempt to reform our legal system. Well, it's simply not good enough, and I'm proud to be part of a party that is going to stand up for the people, stand up for fairness and stand up for people who need a government to be on their side to ensure that they have a say and that they have access to justice.
This bill is a disgrace, but it's not a surprise from this government. It is really just another example. What would you expect from a government that brought us the robodebt scheme, a disgusting attack on the most vulnerable Australians; a government that makes the NDIS almost impossible to navigate for people with disability and their families; a government that makes people jump through hoops and fight for what are the most obvious supports that they need through the NDIS? We see this time and time again on the NDIS committee and from our own constituents. It's just a government that's not listening, that's out of touch with the community and that doesn't care about these issues. It doesn't care about standing up for people who really need access to justice, to a decent income and to a fair go.
I rise to speak to the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. At the outset, I just make the simple observation that it's a very bad bill coming from those opposite, who belong to a tired eight-year-old government that seems absolutely obsessed with avoiding scrutiny in many areas of public life. Time and time again they show us the lengths that they're prepared to go to in order to avoid scrutiny, by not respecting proper process in this place, by not answering questions, by deflecting, by telling mistruths, and generally by avoiding scrutiny wherever they can in a constant attempt to look after those who support them, particularly in big business. They have little regard, as the member for Canberra just said, for ordinary people with their everyday struggles.
The proposed changes in this bill strike at the very heart of the notion of justice in this country by curtailing the opportunities that our citizens have for the pursuit of justice through class actions. This bill will have the effect of discouraging this pursuit of justice, leaving many with nothing after falling victim to corporate malfeasance. Not everyone in corporations sets out to do the wrong thing, but there are countless examples where corporate malfeasance has destroyed the lives of Australians and destroyed smaller businesses. It's simply not good enough that we make it harder for people to seek justice.
So I stand with my colleagues on this side of the chamber to resist and oppose this unacceptable attack on justice that is in this bill. Class actions are a critical means for accessing justice in this country, and this bill will make it harder for ordinary Australians to take this route. It's ordinary Australians who will be impacted. It won't impact the big end of town, folks with deep pockets or wealthy benefactors. It will impact ordinary Aussies who have been the victims of an injustice. Banding together with fellow victims to finally secure a just solution is the route that the government are trying to close. For these people, class action litigation is typically their only option, and this bill will deliberately weaken this option and make it more difficult for these ordinary Aussies to access justice. That's why we in the Australian Labor Party, the federal opposition, stand against it.
Specifically, this bill will set a limit on litigation funding schemes, which is a critical way that class action litigation is enabled and powered for ordinary Australians. This bill will set such a limit on that ability in two ways. Critically, firstly, the bill requires courts to approve or change the allocation of funds from a successful claim so that such funds are distributed on a 'fair and reasonable' basis. The actual impact of this change is critical. Before commencing class action litigation, funding agreements are made between the litigants' lawyers and funders of class action litigation, and these agreements concern the allocation of funds after a claim is successful. These are private arrangements which help to kickstart the class action litigation process, but, under this bill, if such an agreement allocates more than 30 per cent of the funds from a successful claim to the lawyers or the funders, the court will have to deliberate on it. This is an extraordinary change, forcing a private agreement to be pulled apart in a needless and wasteful legal process. You have to wonder why those opposite want to do that.
In that context, the bill uses the term 'fair and reasonable'. Like an increasing number of Australians, I don't associate the term 'fair and reasonable' with those opposite, with the current federal government. I've listened carefully to their contributions to the debate, and I haven't heard anybody adequately explain the need for this particular change. But maybe, honestly, truthfully, they've just come to the same conclusion as those of us on this side—the conclusion being that the intent and purpose of forcing courts to tear apart funding agreements is solely designed to discourage ordinary Australians from accessing justice through a class action. How could you in good conscience support that? Make no mistake: this change will have a chilling effect on the delivery of justice through class actions, but that is the intent of these changes.
These agreements play a critical role in getting class action litigation off the ground and into court. Why would they want to make that harder? Well, I think their intent is clear. If they were truthful about it, money plays a big role in your ability to access justice in this country, and, if you are not reasonably independently wealthy, the prospect of court can be prohibitive and dissuading. A class action case is, then, in many instances, the only way an ordinary Aussie can have any reasonable prospect of accessing justice. So the funders of class actions play a critical role in facilitating that access to justice. Those opposite do themselves and this debate no great assistance by railing against the critical role of funders in enabling class action litigation to take place. That is the first way this bill will place unnecessary limits on class action litigation.
The second change will completely alter who can actually make a claim and be party to a class action litigation. Currently, class actions operate under an opt-out system, which means those caught up in or impacted by the class action can be an automatic claimant to an eventual win. This is important. It may be impossible for lawyers to reach each person impacted by a matter subject to a class action litigation. People may be inaccessible due to geographic distances or even communication issues. Being initially inaccessible when the class action is being put together should not be a barrier to accessing and benefiting from justice. I've seen examples of that in the Northern Territory. Under the present set of rules, class-action litigation has an opt-out provision; if you're identified at the start of the process, you can still benefit from the justice which flows from a successful outcome. But the bill would shift this from opt-out to opt-in. If you aren't involved from the beginning, too bad, so sad. If you miss the start, then you miss out on any chance of justice.
This is extraordinary, even for those opposite. I honestly scratch my head on this one. Why would the government be making access to justice harder for people—the vulnerable and disadvantaged, those who live remotely, those far from the centres of power in capital cities—particularly those who are most in need of justice? Why would you do that? Think about some of the people this will impact.
As I said, I'm proud to stand here representing my electorate of Solomon, Darwin and Palmerston, but also the broader Northern Territory. We have ancient and vibrant communities and cultures in the Top End, many of them in remote communities. And, of course, like most First Nations communities around our country, they have experienced oppression and injustice, and they have experienced these things as individuals, as families and as communities.
Organising a class action among residents of remote communities, as you can imagine, has it challenges. Those residents will be effectively denied justice with this nonsensical opt-in change. It's dangerous and un-Australian. That's what Darryl Kerrigan from The Castle would say. We're not talking about theoretical matters here; we're talking about real matters that involve real Aussies and their access to justice. It's not a debate at a university. I personally wasn't a university debater. Sometimes I think many of those opposite still feel like they're back in that university debating world, where it's all just theoretical and fun and it's all about trying to show how clever you are. But we're not talking about that. We're talking about the real world and impacts on our fellow citizens. We're talking about good people, Aussies who should have access to justice.
I'm reminded of some people in my electorate, who, after being taken from their families and put into the Retta Dixon home, gathered together to try to access justice for their removal from their homes and for what was done to them while they were in the Commonwealth's care. If they hadn't had the ability to get together and add in people who experienced the same injustice they did, how would that have been justice for those people who were treated so badly? As the member for Canberra just said, what would you expect from those opposite? Those opposite still won't allow a debate on whether, for example, territorians—whether in the ACT or the NT—have the same rights as any other Australian to make the laws that affect them. So it's not a surprise that they want to make it harder, because it's what they have form in doing: making it harder for people in NDIS to get the support they need; and sending robodebts to people and then paying out when the criminality of what was done to a lot of our fellow Australians has been so obvious.
Those opposite have form, but I'd ask them to stop and think about what they're doing and the impact it's going to have on Aussies' ability to seek justice through class actions with the changes they're suggesting. As the member for Whitlam said at the beginning of this debate:
It's clear to us that the changes contained in this bill are part of a pattern of hostility from the coalition to those in our community who seek justice via class action lawsuits.
This is an egregious bill. It will deny justice to millions of ordinary hardworking Australians. Everybody in this place represents those people, so I say: shame on all those opposite who voted for it. I call on those opposite to reach into their conscience—and the same for the crossbenchers—reject this bad bill and allow all Australians to have access to justice. If you're not interested in Australians having access to justice then you'd really want to be asking yourselves what you're doing here. I have a pretty good idea of what some of you're doing here. But it should be to make sure that those that you represent in this place have every opportunity, particularly the most vulnerable. After all, that is how we judge a society, and I hope that how we judge Australia in our role as parliamentarians is by making sure that the most vulnerable, those who may be living remotely from the seats of power, still have access to justice in this country.
I rise to speak on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. I recognise the contributions made by members in this debate. This bill has a magnificently Orwellian title. It is another bill that will not do what it says on the tin. In fact, it will do the opposite. As previous speakers have said, it will make it more difficult not just for my constituents but for constituents right across the country to access justice. The stated intent of this bill is to protect the interests of plaintiffs in class actions by setting limits on litigation funding schemes—funded class actions—by, firstly, providing that a court must approve or vary the distribution of claim proceeds between class members, lawyers and funders, which is fair and reasonable, and, secondly, by imposing a rebuttable assumption that a proposed distribution would not be fair and reasonable if less than 70 per cent of proceeds goes to the plaintiffs.
However, it is clear this bill is primarily aimed at making class actions more difficult for plaintiffs and protecting the interests of wealthy and powerful defendants. This is not a new story, but part of a continued pattern of hostility on the part of coalition members to the ability of individuals to access justice through class action lawsuits. In Asbestos Awareness Month, this bill is particularly galling. It should be noted that as part of this process—and it has been a pretty rushed process—the Treasury certified a partisan report by government members of the Parliamentary Joint Committee on Corporations and Financial Services as an independent report, as the equivalent of a regulatory impact statement for the many measures outlined in this bill. As somebody who in a previous life had to put together many regulatory impact statements, I'm flabbergasted.
The bill has been subject to an incredibly short inquiry by the Parliamentary Joint Committee on Corporations and Financial Services. Not only was the inquiry short; it provided limited opportunities for public engagement, including only a one-week period for people to make submissions. If this is such an urgent bill to get through, there should have been appropriate consultation. Thankfully, Labor members of the committee opposed the bill and produced a dissenting report recommending that this bill not be passed.
As I said earlier, the stated objective of this bill is to protect the interests of plaintiffs in class actions, but the real, though unstated, objective of the bill is to protect the interests of powerful defendants by making it more difficult for people to bring class actions in the first place. It is a testament to the current government's incompetence that the bill fails to achieve either the real or the stated objective. As one of the submitters to the committee in that very short time span, Phi Finney McDonald, put it:
That the Government is seeking to present this reform as a consumer protection measure is Orwellian gaslighting.
Further highlighting the idiocy of this legislation is that it is opposed by leading class action defendant lawyers Herbert Smith Freehills. Phi Finney McDonald wasn't alone in his assessment. The committee heard overwhelming evidence that most of the measures in this bill would leave class action plaintiffs and defendants significantly worse off. For example, the evidence received by the committee strongly indicated that the overall impact of the rebuttal 70-30 presumption would, in fact, be to drive up litigation costs, discourage plaintiffs and defendants from settling disputes and so, in fact, delay the resolution process and, more generally, make the law worse for everyone. Moreover, such a presumption would also raise the risk for funders. No funding would be available for some meritorious claims, and funding costs for all claims would likely be higher than they otherwise would be.
Most submitters argued that, rather than resolving uncertainty in the existing law in relation to the availability of common fund orders as recommended by all the members of the committee back in December 2020, instead the bill promotes uncertainty and confusion around common fund orders, to the detriment of plaintiffs and defendants in class actions. By requiring class members to agree in writing to be members of a litigation funding scheme, submitters have argued that the bill would lead to an increase in the number of closed class actions. This would in turn result in multiple class actions for a given event. In other words, it would actually lead to much greater inefficiency and possibly much greater litigation costs.
It's also important to mention that, while the explanatory memorandum acknowledges that the bill gives rise to a range of regulatory impacts on business, the committee in making the dissenting report to this bill makes the point that those impacts have not been properly considered or even understood by the Treasury or the government. That is because, instead of preparing a comprehensive regulatory impact statement in relation to the bill—something I mentioned earlier is a task I've been involved in previously myself—the Treasury certified a report by Liberal members of the committee as an independent review which involved a process and analysis equivalent to arrears. It's quite extraordinary, really. In other words, the Department of the Treasury certified a report written by government MPs as independent and used that report as a primary justification for going forward with this bill.
But there are also broader constitutional concerns around the validity of this bill. According to the Law Council, former solicitor-general Justin Gleeson SC and other legal experts, it's not clear that the bill is constitutional. Multiple and serious concerns were raised in submissions, including but not limited to whether the corporations power in the Constitution and/or the referral powers to the Commonwealth can support the provisions in the bill, whether the provisions would amount to an inconsistency with state class action provisions so as to override them pursuant to section 109 of the Constitution, impacts on the group costs order provisions unique to the Supreme Court of Victoria and potential issues arising in respect of overriding the power of state courts or directing state legislatures.
The explanatory memorandum fails to mention or address these constitutional questions in any way. Indeed, in response to these concerns raised in submissions, the Attorney-General's Department itself was unable to provide the committee with any meaningful assurance that the bill was constitutional or offer any rebuttal whatsoever to any of the concerns set out in Mr Gleeson SC's legal opinion. There was literally no explanation offered as to how or why the bill is constitutional. Indeed, according to the dissenting report, 'it was clear from the long silences, non-answers and visible discomfort at the questions that the officials from the A-G's Department themselves harboured doubts as to the bill's constitutionality'. It's extraordinary for it to have been brought forward without these questions having been answered.
Many of these concerns were raised most recently in a decision by Justice Beach, of the Federal Court of Australia, on 17 November 2021 in Stanwell Corporation Limited and LCM Funding Pty Ltd. Justice Beach raised some of these issues around the constitutionality and drafting of the bill and actually went to some of the rationale behind this bill. Some of the comments in that judgement included that the bill:
… may need to be modified to bring its scope within the referral contemplated by paragraph 51(xxxii) of the Constitution. It may need to be modified to address direct or indirect conflicts with the provisions of Pt IVA of the FCA Act.
This was only a week ago. In the same decision, Justice Beach found:
… the proceeding dispels the myth of the so called advantages of book building in a case of this type. The book building here has resulted in an unnecessary, costly and inefficient delay of seven months in order that over 50,000 retail customers be separately signed up to individual funding agreements. There is little justification for such a barrier to entry so to speak or justice. Fourth, to allow the proceeding to remain closed will incentivise others to launch parasitic actions to cover the balance of the universe of electricity consumers. So the potential for and the vice of a multiplicity of proceedings. And indeed if not productive of such multiplicity now, that position may be all but inevitable if I later deliver a judgment in favour of the present closed class, unless I open the class after judgment.
Yet that is exactly what this bill will invite.
But it's not just about those particular important issues that go to the constitutionality of the bill; it also goes to the real-world impacts. This isn't merely some sort of academic process. There are many landmark class actions that wouldn't have gone ahead had the measures in this bill been in place. My colleague the member for Moreton has provided some of those examples: Mervyn Street v State of Western Australia—otherwise known as the Western Australia stolen wages action—a class action involving thousands of Indigenous Australians in Western Australia whose wages were unjustly withheld or not paid as a result of wage control legislation in effect until 1972; Eileen Cummings v the Commonwealth of Australia—a class action involving stolen generations survivors; and Gregory John Lenthall and Anor v Westpac Banking Corporation and Anor—a class action alleging that Westpac overcharged its life insurance customers. There's a bit of a theme emerging here about who exactly is going to be excluded if these measures actually go through.
Bradley James Hudson & Ors v Commonwealth of Australia, an environmental contamination class action against the Commonwealth of Australia relating to chemical contamination at the Army Aviation Centre at Oakey in Queensland, resolved losses in property and business values. A couple of my colleagues in this House have worked hard to bring those key concerns about the consequences of PFAS: the impacts on small farms and tenancies outside defence bases. The idea that those sorts of participants should be excluded is quite extraordinary. Riley Gall v Domino's Pizza Enterprises Limited was a class action brought by delivery drivers and in-store workers who had systematic underpayment relative to award entitlements. We shouldn't be surprised with that last example about why this government would like to exclude such actions from coming forward.
Even when they try to give Orwellian titles to their legislation at times, they allege that they are on the side of working people and their families across this country. The minority dissenting report on this bill finally came down to make the case that in the end the proponents of this bill haven't made their case. Today, again, they haven't made their case. This bill should be voted down.
I'm pleased that this side of the House is opposing the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 vehemently. It is doing so because class actions are an important part of our judicial system. They gives the little person a voice. They give people the ability to undertake a court battle that perhaps their finances, in 99.9 per cent of the cases, wouldn't allow.
We saw the minority report, which I tabled in here the other day. We had an inquiry into the bill, and it was rushed through. We were given one day to hear witnesses. We couldn't call all the witnesses up that we wanted to. We had no time to have a good deliberation and understanding and to give other people a voice. This was rushed through. This was a plan by the government to rush through a report to bring this legislation on.
It makes you wonder why they are desperate to pass this legislation. Why are they desperate to pass this legislation concerning an important part of our judicial system? Some of the evidence that we heard in the committee was quite damning of this bill. In fact, Justin Gleeson said in a submission that this bill could be unconstitutional. That raises questions that should be answered. We asked for answers, we wanted it investigated further, but of course the government numbers on the committee made that impossible.
Without a class action regime, such small people, everyday Aussies, battlers, wouldn't have their voices heard. They wouldn't have the means to seek redress or compensation in the courts on their own. This has given the ability to have some form of justice to many people. We've seen it recently with the robodebt debacle. Through a class action, $112 million will be distributed to 450,000 eligible individuals of that group, people who would otherwise never have had a voice. They wouldn't have been able to fight the government to have justice. These people needed justice. There was money taken from them which shouldn't have been taken from them. On their own they had no chance of beating the government. But, through a class action, funded appropriately, this was possible, and $112 million is now there for the 450,000 people that had some wrongdoing to their debts et cetera through robodebt. But these claims are very costly, and most plaintiffs just wouldn't be in a position to fund the actions themselves or cover the costs in case of an adverse finding. Litigation funding schemes are therefore an important part of ensuring class actions are fair and equitable.
The question is how to prevent third-party litigation funders from claiming disproportionate shares of a successful action relative to the costs and risks. Understanding and resolving this question is the aim of the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. But this is why the committee's inquiry into this was so important. It just didn't give it any justice by having one day only of hearings and then 24 to 48 hours to table the report. It just did not do it justice. If the government was serious about this, they'd refer it to a Senate committee or another committee to do it justice, by looking at all the issues and what's important over a period of time. It's not surprising that the criticism came from both sides, from corporations as well as the lawyers who do class actions.
This bill and the inquiry process leave a lot to be desired. The bill is intended to protect the interests of plaintiffs in class actions, but in actual fact it does the exact opposite. It takes away the voice of justice from plaintiffs, because, by making it more difficult for people to bring class actions in the first place, the bill will protect the interests of powerful defendants. If you look at some of the cases—and we've heard of many of them in the debates; the member for Solomon mentioned a few, the member for Bean did earlier and I'm sure others will mention some—there was a class action on behalf of 10,000 survivors of Victoria's 2009 bushfires in which 119 people died and over 1,000 homes were destroyed. The lawsuit was taken against power distributor SP AusNet and asset managers Utility Services Group after the Victorian Bushfires Royal Commission found that it was a faulty electricity cable that caused the bushfires. In 2014, a $500 million payout was secured, making it the biggest class action settlement in Australia's legal history. You can imagine, some poor farmer, somebody that had a house or a pensioner trying to prove that on their own. It would have been impossible. It was quite obvious when we had the many witnesses who were part of the class action before us and we asked them the direct question, 'If it wasn't for the class action and the system that exists, what would have been the outcome?' Pretty well 100 per cent of them, all of them, said zero, zilch, nothing. There wouldn't have been a payout, they wouldn't have had their voice heard and they wouldn't have had any findings against the rich and powerful companies they were fighting. That was just one example of the electricity distributor in Victoria.
There have been many others. For example, in 2010, leading litigation funder IMP Australia helped initiate more than 10 class action lawsuits against leading banks, including the Commonwealth Bank, ANZ, Westpac and NAB, alleging that some $400 million had been siphoned from customers. You can just imagine an individual Aussie with a small bank account discovering that for years they had had a tiny little bit siphoned out of their account continuously from the day they opened their bank account trying to fight ANZ, Westpac, NAB or the Commonwealth Bank. They would have had Buckley's. They would have got nowhere. Yet, through this class action system we have, it made it possible for people to have their voices heard, to have justice and to be recompensed for it. It is important. It is so important to keep the system that we have to allow people to have a voice.
Another example is the over 600 shareholders who took a class action against Sigma Pharmaceuticals, initiated in 2010, where $380 million of losses were siphoned through Sigma Pharmaceuticals when the lawsuit came down. They paid out over $300 million to people to ensure that the wrong was rectified.
While class action lawsuits are sometimes criticised for being lengthy and being costly, there is no doubt they have contributed to giving the little people in our society a voice in the way they are treated by powerful corporations and institutions, and there is little doubt these kinds of lawsuits will always be around. But we need the power of collectiveness, to be in a collective, to be a force against some of the most powerful companies in the world and some of the biggest multinational oligarchies that exist. Can you imagine an Aussie battler trying to fight any of them? It would be impossible. We need a good class action system that has outcomes—we have seen outcomes in hundreds of class action lawsuits where the people seeking justice would have had no other way of doing it. Making it more difficult to bring class actions will only be detrimental to Australians.
How can we ignore the overwhelming evidence heard by the committee that this bill will leave class action plaintiffs and defendants significantly worse off? We were told in the committee, repeatedly, that the bill does nothing to resolve the current uncertainty in relation to the availability of common fund orders, recommended by all members of this committee in December 2020. Instead, we were overwhelmingly told the bill promotes uncertainty and confusion around common fund orders. In addition, the bill requires class members to agree in writing to be members of a litigation funding scheme. The committee heard this would lead to an increase in the number of closed class actions and possibly also multiple class actions for a given event.
Then there is the question mark over whether the bill is actually constitutional or not; I raised this earlier. Clearly, this is a real, serious problem. It is difficult to overstate the level of concern expressed by the submitters to this inquiry about the advice received from Justin Gleeson that the bill may not be constitutional. That in itself should be investigated before this bill goes any further. That is a serious question.
Labor members sincerely regretted that they weren't able to do this bill the justice it deserved and have a proper inquiry. We were given less than one day to consider the majority report and respond to it, but this is nothing new; the entire process around the handling of this bill has been shambolic from the start. Members of the public were given less than one week to review a draft of this complex legislation after it was distributed. We were hoping that people would see it and make submissions. Most of the feedback Treasury received from submitters was ignored, and here we are with the bill being introduced.
Deputy Speaker Owens, I'm sure you'll agree these are important and complex legal matters we're talking about. You cannot have an inquiry and come up with a report within 48 hours—half a day for an inquiry and half a day for the committee to meet and deliberate on such a complex bill. It was a rushed time frame, it didn't create any good debate, and it didn't create ideas coming up with good recommendations et cetera. Obviously the government had a mindset and a plan for this bill and just wanted to bulldoze it through the committee and bring it here to be voted on.
The impact of this legislation will be severe if it gets through. We had litigation funders and plaintiff law firms provide the committee with a list of actual examples of class actions that would not have proceeded, or at least would have been unlikely to have proceeded, had the measures in this bill been in place. They are all attached to the report; if anyone is interested in reading the report and the dissenting report, there are attachments there. I assure you: these are important actions that would have been impeded by this legislation. We were told that most of these wouldn't have seen the light of day had there not been the system of class actions there for us. However, the government insists on proceeding with this bill. It should not do so until the bill has been the subject of a proper inquiry process, whether by the committee that I served on or other parliamentary committees. Such an enquiry is a must before this proceeds anywhere. We need to give witnesses sufficient time to respond to the questions. And, in addition, the Attorney-General's Department needs to comprehensively address, in writing, those concerns that I raised earlier—from Justin Gleeson and other legal experts—about whether the bill is constitutional. These are serious, serious concerns.
The matters handled in this bill could have serious ramifications on citizens' access to justice. It begs the question: who is this bill aiming to protect? I gave a few examples of class actions that were successful, of ordinary Australians who grouped together to take on one of the big corporations—the big banks or the multinational pharmaceutical companies. Those ordinary Australians would have had no success at all without this current system. Individually, they would have been picked off one by one. The high costs of our judicial system wouldn't have allowed them to seek justice. But it's clear that, as this bill stands, it's the people who stand to lose the most if this government has its way and gets this bill through. (Time expired)
I rise to speak on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. We are all equal before the law. Well, that's what we are taught at school, and in fact that is even a provision of the Universal Declaration of Human Rights. Article 7 states:
All are equal before the law and are entitled … to equal protection of the law.
But the reality is that in Australia today, because of the obscene and the prohibitive cost of justice, our legal system is broken and we are not all equal before the law. Where a small business has a commercial dispute against a large foreign multinational, that small business's chance of resolving that dispute through our court system is almost next to zero. The large multinational company can simply laugh at that small business, and say: 'How are you going to possibly afford the legal costs? And even if you win in the first instance, we'll appeal it. We will delay the procedures, we will bleed you dry.' When that occurs we are not all equal before the law.
Look at the costs of the former Attorney-General's legal proceedings against the ABC in his defamation case. He was the plaintiff and his costs were estimated at somewhere around $1 million. The ABC have acknowledged that their costs were at least $800,000. And that case never even made it to a courtroom. What do people working in the real world, in the western suburbs of Sydney and Melbourne, think? These people are adding value to the economy by making things and growing things and producing things. How can they possibly look at completely unproductive work that does nothing to benefit the overall economy, such as that defamation case, which has close to $2 million in legal costs and yet never even gets to the courtroom because it's just a mediation? People who are involved in family law disputes look at the costs of the actions and just see themselves being bled dry by a system.
The reality, as much as we don't like it, is that class actions are the only things that provide many small businesses and many small plaintiffs the opportunity to seek justice before the courts. Yes, these litigation funders are sharks. Yes, I am sure that in many cases they have ripped people off. But a form of price fixing—setting a maximum of 30 per cent that the litigation funder can obtain for his costs—is not the answer. That is trying to fix the symptom, not the cause of the problem. Going down this track—putting that 30 per cent cap on—won't result in greater returns for small plaintiffs. All it will do is change the risk-reward calculation for these large litigation funders. They are, in fact, gambling. They will weigh up the odds of the merits of the case. They will weigh up the odds of the potential of winning. They will weigh up the odds of how aggressively the defendant will defend the case. They put all that in, and if they think they can make a great windfall of profits, they will proceed with the case. But if you change those parameters, if you limit it to 30 per cent, you change that risk-reward benefit for them, and the only result will be that more Australians—more individuals and small businesses—will have less access to the courts than they already have. That is something I cannot support.
I think I'm one of the few people in this place who has ever tried to put together a class action for a group of small businesses. It involved extraordinary container detention fees charged by large, foreign multinational shipping lines, many of them controlled directly by the Chinese Communist Party. We had a good case. We won in the first instance. But, because it was a slightly grey area of law, when we took it to the class action funders they looked at it closely and admitted there was slight doubt and, therefore, they wouldn't fund it. Changing the parameters and limiting the amount that the class action funders can get, even though it seems like the right idea, will punish the very people that this legislation says it protects.
What class actions do we have on the horizon? We know that already 10,000 Australians plan to claim damages for COVID vaccine injuries under the government's no-fault scheme. How many more will there be and what case will they have? Clare Eves of Shine Lawyers said:
Some of these reactions have been clots, major strokes, amputations, major cardiac problems, being on oxygen, having severe headaches that are debilitating and unable to return to work.
At the moment there's a cap of $20,000. How $20,000 compensates someone who has their leg amputated, I do not know. My great concern is that we are going to see more of these class actions involving the TGA.
As many other members of parliament have given examples of potential class actions, I would also like to give one. The TGA data reports that the rate of adverse events from the COVID vaccines is 0.21 of a per cent, or 2.1 in every 1,000. But the problem is—the question is—how accurate is that data? There's another group that reports on adverse reactions, and that is a group called AusVaxSafety. Where the TGA relies on a system of people voluntarily reporting to them, AusVaxSafety, on the third day after someone has had their COVID vaccine, sends out a text message and requests the information. As at 14 November they had sent out over 4.6 million text messages and had surveys completed. They have found that 43.8 per cent of people had reported one adverse event and 0.9 per cent of people had reported visiting a GP or an emergency department. Now, how is it possible that the TGA data says there are 2.1 adverse reactions reported to it per thousand and yet AusVaxSafety is reporting 90 per 1,000?
I am, Madam Deputy Speaker. I am setting out the potential examples of class actions, as many other members have done during this debate. I think it's important that, as the government, we understand what the potential for these class actions is and how this bill will actually shut the route for Australians seeking justice and seeking compensation. I believe the TGA have set this government up for many claims of class actions because they are using a system of reporting that is unfit for purpose and that is missing many of the adverse reactions.
The question is: how many class actions will be knocked out because of this potential legislation? Published in the Australian a few days ago was a report that stated:
PwC found that more than 90 per cent of cases—
that's class action cases—
may not have gone ahead because the funders and lawyers would have been left with either a loss or without an adequate return to justify the risks of taking on a long, complex case with uncertain outcomes against a well-resourced defendant.
The article goes on:
The government's proposals would have denied justice to hundreds of thousands of Australians who have turned to class actions to help rebuild their lives.
I don't know whether it is correct that 90 per cent of class actions wouldn't have gone ahead. But I do know that this legislation would change that risk-reward balance and result in fewer class actions going ahead and result in fewer Australians having access to justice.
Of course, with respect to potential cases, we only have to look at the one example where there is a potential class action that Australians may wish to sign up to—the TGA's approval of the Moderna vaccine for 12- to 17-year-olds. Even though that is made in the USA, it does not have approval in the USA for 12- to 17-year-olds. It does not have approval in Germany for 12- to 17-year-olds. It does not have approval in France for 12- to 17-year-olds, nor Sweden, nor Denmark, nor Finland, nor Norway. But yet, here in Australia, our TGA has decided that the Moderna vaccine can be injected into 12-year-old Australian children. Now, one only has to look at the recent data, again from AusVaxSafety, to say what a potential great risk this is of future class actions. The AusVaxSafety data makes a comparison of the Pfizer and the Moderna vaccines relating to the impact on routine activities of children aged 12 to 15. After the second dose of Pfizer, there are reports of 22 per cent of children missing work, study or routine activities. But, when it comes to Moderna, after the second dose, 39 per cent of Australians aged 12 to 15 years are reporting missing work, study or their routine duties. How can we allow this here in Australia?
We have this data. This data is publicly available. The TGA continue to close their eyes to it. They continue to ignore the fact that countries like Germany and France have suspended the Moderna vaccines in 12- to 17-year-olds while we continue it in Australian children. The adverse reactions continue to mount; the potential legal cases continue to mount; and the potential for class actions continues to mount.
I cannot vote in favour of any legislation that further restricts Australians' access to the courts and further restricts Australians'—especially those small businesses—access to justice. That is exactly what this legislation, sadly, does. To me, it is contrary to all the principles that I believed in when I signed up to the Liberal Party: equal rights, a fair go and equal opportunity for small business; protection of individual citizens; and allowing the free market to work rather than using price caps. We would do far better to have more firms in the area of class action litigation funding rather than fewer. That is the way we bring the cost down, not through artificial Soviet-style price caps. That is not the way the Liberal Party goes about things. But that is the mentality and ideology that they bring with this legislation. Therefore I thank the House, but I will be voting against this legislation.
I rise to speak on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 and the amendment moved by my friend and colleague the member for Whitlam. Those opposite tell us this bill is all about protecting the interests of plaintiffs in class actions, that it'll make it easier and fairer and that it will lead to equitable outcomes and the proper functioning of justice in class action proceedings. But let's have a close look at those claims.
For a start, this bill creates a new requirement that class members agree, in writing, to be members of a litigation funding scheme and to be bound by the scheme's constitution. For a funder to obtain a fee from a claimant, the claimant must be a member of the funding scheme. This is a departure from the current opt-out model, where individuals who do not wish to participate in a class action have to opt out. The current opt-out model is well regarded. It was recommended by the Australian Law Reform Commission at its inception. In first recommending it, they noted that it promotes access to justice. It's an efficient, simple way for everyday people to engage with the legal system in order to get justice. This is the first bit the government gets so wrong with this bill. They'll make it more difficult for members of the public to sign on to class actions and more difficult for their legal representatives to get class actions off the ground in the first place.
The second change those opposite want to make relates to the distribution of funds at the end of proceedings. Those of us on this side, of course, wish to see those funds distributed fairly. But, as with so much of the legislation we see from this government, they've made a half-hearted attempt at a positive change here and just haven't got it right. Their changes to the way funds are distributed are expected to have a number of unintended consequences, based on the evidence of experts during the committee inquiry process. It discourages settling disputes, which can lead to proceedings dragging on and costs mounting for both plaintiffs and defendants. It also creates uncertainty in the process, which, again, disincentivises class actions getting off the ground in the first place.
We can see from these areas the government is looking to alter in this bill that this isn't about making class actions fairer at all. In fact, this legislation is all about doing their mates in big business a favour. It's about making it harder for ordinary people to stand up to big business and get justice. One submitter to the committee inquiry on this bill referred to it as 'Orwellian gaslighting'. How true is that! How true is that, in fact, for so much of what this government has brought forward in its eight very long years in power. Australians now know that, when this government says it'll do something, it can't be trusted, and they don't think—they know—that, when the Prime Minister says something, he certainly can't be trusted.
After those eight long years, after so many promises from those opposite and from the Prime Minister, what do they have to show for it? Stagnant wages, work that is more insecure than ever and living expenses through the roof. We all know people are paying $2 a litre to fill up their cars with petrol right now. Those opposite have nothing to show for their time in office, so they bring out the marketing boffins and they spin, spin, spin their way into an election. They publish their glossy pamphlets, they spend tens of millions of taxpayer dollars on advertising that says pretty well nothing, and they come up with slick names like the one for this bill—'enhanced outcomes', 'streamlined services' and 'fairer standards'. After eight long years, Australians know what to expect when they see terms like that from the Liberal-National government. They know they can't trust those opposite to do what they say they will do. We know that, when they say 'enhanced outcomes', they don't mean for ordinary people; they mean for their mates in big business, the hyperwealthy. When they say 'streamlined services' it means cuts, cuts, cuts. When they say 'fairer standards', they're undercutting protections and letting the market rip.
This bill fails the simple test of whether it will make the lives of Australians better. It won't. It does nothing more than protect those who have potentially wronged a large number of people. But I suppose those opposite can pat themselves on the back for a job well done when that's the outcome. Don't think I'm exaggerating on that point. What we need to make clear is that those opposite know what they're doing. It is not an accident that this bill leads to worse outcomes for ordinary Australians. It is by design, and they're entirely shameless about it.
The committee inquiry process brought up a myriad of issues with this bill and outlined the perverse outcomes I've spoken about so far. But what I find most fascinating is that there were even questions raised about the constitutional validity of this bill. Someone as respected as former Solicitor-General Justin Gleeson SC has raised concerns that this bill is unconstitutional, and still the government presses ahead. It's incredible. So set are they on undermining the legal rights of everyday people that they're more than happy to disregard the Constitution and the opinions of multiple legal experts on that matter. They heard it in the inquiry from evidence. Labor drew attention to it right throughout the process and in the dissenting report. But what did the government members do? They misrepresented the evidence of the experts and then jumped on to the next point. You've got little time to worry about matters of the Constitution when you've got to protect multinational corporations.
I want to come back to the importance of class actions and why it is so important that we oppose the bill. Class actions, as I've outlined, give more equitable access to justice. They open the door to the legal system for ordinary people, often against massive corporations. They are an opportunity for people who have been wronged to shield themselves from the upfront costs and risks of litigation. Without a properly functioning class action system, the door to justice would be closed for many—perhaps most—Australians. It's an efficient, easy and fair way for people to engage in legal action and seek justice.
Class actions are also about class. They are about power in numbers. While some people don't have a platform or a loud voice, when you amplify this through class action there can be a mightily loud collective voice. Class actions are all about engaging with people who may not be at home in the foyers of courts or the chambers of lawyers and making sure that their concerns can still be addressed by the legal system. You don't need to have a lot of money to be involved in a class action and get legal representation. They create economies of scale. They make it more financially viable to take legal action against well-resourced defendants, including large corporations or government departments. Having a group of individual claims where people have had similar experiences or circumstances means more people get access to justice.
But this bill seeks to disrupt the way class actions work by creating an additional barrier for people to engage—by making them opt in, rather than opt out. Not only do those opposite want to make it more difficult for Australians to participate in class actions; these amendments also seek to limit the role of the legal system in holding corporations, large organisations and even the government to account. In our society, there are many crucial checks and balances to protect Australians. Obviously we have the media, which operates as the fourth estate by journalists' scrutiny, publishing stories and holding people to account. The legal profession is a crucial additional layer of scrutiny in holding corporations and governments to account. But a class action can also shine a spotlight on a problem and add to accountability. Highly skilled lawyers and legal practitioners forensically analyse documents. They interview people and work to get to the bottom of a situation. Even the fear of a class action which brings careful analysis and legal might, sometimes resulting in media interest, can be a powerful motivator for companies and organisations to respect the rights of clients and those they engage with. The scrutiny that class actions bring helps to protect all Australians, even those who aren't actively participating in them.
In Australia, we have seen landmark class actions brought against banks, governments and big business. Take the stolen wages case, where First Nations people were able to recover stolen wages from the Western Australian government through a class action. We have heard expert opinions that this case would have been unlikely to proceed had this bill been in place at the time. We have heard this opinion mirrored for cases of the underpayment of award wages, for the overcharging of life insurance by banks and for environmental contamination. Successful class actions on these issues, which got justice, would not have proceeded had this bill been in place.
Again, I want to make it clear that I am not the first one telling those opposite this, nor am I the most qualified person to tell them this. Experts, independent bodies, academics and lawyers have all told them that this is plainly true, and yet they press forward. That's because, for this government, access to justice is meaningless. The benefits of class actions, which I have just outlined, are seemingly meaningless to them. Justice for working people, the repayment of wages, dealing with unfair insurance charges and the payment of damages for environmental contamination or, as we have seen recently in the media, for medical malpractice just don't seem to matter to this government. Why not? It's because this government puts the interests of working people behind the interests of the wealthy, of big business. They've got nothing to lose, because we know if you have big pockets there are no barriers to justice. If you have blind trusts behind you, there are no barriers to justice. You can waltz on into the courts with your legal team in tow and punch down. If they feel they've been misrepresented, they sue. If they feel they've been wronged, they sue. It's because they can. It's because funding isn't an issue for them.
But everyday Australians, I can tell those opposite, don't have the backing of blind trusts. They don't have tens of thousands or hundreds of thousands of dollars to spend fighting a legal battle they don't even know if they are going to win. And so I hear so often from constituents and from people around the country that the wrongs will go unchecked. Sure, they probably have a case to mount, but, whether it be medical malpractice, stolen wages or another issue, they just don't have the means to fight it. That is what class actions are for.
I am proud of us, on this side of the House, because we are here standing up for everyday Australians. They, too, deserve justice. They deserve a fair hearing. They deserve to get it without the stress of going broke if they lose. That is what this is about. That is why we are opposing this bill. So I urge those opposite, if they care about fairness, if they care about the rights of ordinary people to get justice, to withdraw or vote against this bill.
I rise to support the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. Can I start by rejecting the speech by the member for Cooper—what a load of hyperpartisan nonsense! This is not the end of the class-action system by any means. That is not what this bill does. This is not what this bill is aiming to achieve. This is the fallback we see from Labor all the time: when they can't mount a coherent argument, when they can't mount a coherent set of amendments, they simply enter into a race to the bottom with hyperpartisan arguments about how the world is going to collapse and the sky is going to fall in. It's simply not going to occur. We've seen it time and time again. They resorted to that so often during the COVID period. Labor would say that nobody could get a vaccine because of supply issues. That wasn't the case. All they did was succeed in convincing people not to ring their GP and make an appointment. They said that we would never meet the 70 per cent and 80 per cent vaccinated benchmarks because other countries around the world had not—yet Australians have done that, with the federal government's urging.
So, speaking in globo, I would encourage Australians who are listening to this debate to reject the 'sky is going to fall in' narrative from the Labor Party about this bill and have a really careful look at the changes this bill actually entails. This bill is about fairness. It is about accountability. It is about justice—all of those things that you would want, and you would be seeking, through a class-action system. But it would be a class-action system that delivers the results that it is designed to, and that we all want it to—on both sides of the chamber. At the end of the day, if somebody is involved in a successful class-action lawsuit, we want them to get the compensation they deserve. If the decision has been awarded in their favour, then a great wrong has been done to them and they deserve the compensation they have been awarded.
But the reality is that, as much as both sides of the chamber might want that to be the case, that is simply not happening right now. You can stick your head in the sand, like the Labor members opposite, and say nothing is wrong and if we touch anything about the class-action system the whole class-action system will collapse, which is just nonsense, or you can do what this bill does, what this government has done, and take a really thoughtful, considered approach and look at the class-action system and come up with some targeted recommendations and legislative changes as to how we can make the system better and how we can make sure the money finds its way to where it is needed, which is those who have had wrong done to them—not lawyers, although lawyers will still get paid, I'm certain of that; and not litigation funders, though they'll still take their cut, just hopefully not as much and not like the outrageous examples we have seen.
It's another example of how the Labor Party have completely forgotten and wandered away from their roots. They used to be about the working class. They used to be about everyday Australians. They used to be about Australians doing it tough. But they don't think about them anymore. They only think about what responds well on Twitter and what is trending out there and what argument is going to look great for their woke mates. It's this side of the House that is thinking about those Australians who are doing it tough.
When it comes to the class-action system, I really want to pay tribute to my colleagues who have already spoken who have been so passionate about pushing forward these changes. The member for Mackellar, ably assisted by the member for Curtin, as part of the Parliamentary Joint Committee on Corporations and Financial Services, has done a lot of the review work. But I go back to my point that these are very considered and targeted changes. We've had the Parliamentary Joint Committee on Corporations and Financial Services conduct a review. We've had the Australian Law Reform Commission conduct its inquiry into litigation funding and class actions. In addition to those reports, the bill itself has had extensive consultation by the Treasurer and the Attorney-General, which included a month-long consultation between 1 and 28 June 2021 on policy questions. As well as that month-long consultation, the exposure draft was released between 30 September and 6 October 2021 with a draft of the bill and regulations for public comment. Finally, following the exposure draft, there was further targeted consultation with both plaintiff law firms and litigation funders, including the Law Council, Litigation Lending, Omni Bridgeway and Shine Lawyers.
This legislation, through this consultation, has been designed to be a scalpel, not a broadsword. It's not a demolition; it's not a bulldozer running through the class action lawsuit scheme as those opposite would claim it is. It involves very targeted changes that are enabling more money to go to litigants who have been wronged. Let's re-establish the problem and the very stark examples of injustice that this government wants to confront and that those opposite are happy to stick their heads in the sand and ignore. I could look at their motives and consider that a lot of these large law firms that specialise in class action lawsuits have very deep links to the Labor movement and to unions, and I could speculate that it's just another example of how the Labor Party will stick up for their union mates and those affiliated with them before they'll stick up for everyday Australians who have been wronged.
But let's focus on the problem at hand that we are trying to address. Let me give you a few examples. In Liverpool City Council v McGraw-Hill Financial Inc, now known as S&P Global Inc, $215 million was awarded to the claimants as part of that class action. Of that, $92 million—43 per cent—was paid to the litigation funders. Another nine per cent was paid to the lawyers. So when all was said and done, those people who had actually been wronged, whose lives had been affected and who deserved compensation so they could get their lives back on track, shared in 48 per cent of the damages they had been awarded.
When those who are actually wronged and awarded compensation get less than half, something is wrong in the system. Something is rotten. In Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd—a smaller settlement but important to those litigants nevertheless—$12 million in settlements was awarded as a sum in damage. Fifty per cent went to the litigation funders, and another 15 per cent went to the lawyers. Again, those people whose lives had been turned upside down, who deserved the damages in order to get their lives back on track, who had actually been wronged, got a grand total of 33 per cent of the damages awarded—a third. A third went to the actual claimants.
I'm just a layperson. I started a law degree, and I'm happy to tell you that I did not finish it, for very good reasons. It is not a subject I have a lot of affinity for. But, as a layperson, I look at the fact that these people who have suffered, who have taken the time to go about a class action and who have been awarded substantial damages, have gotten only 33 per cent of the damages. There's something very wrong. There are more examples that I could give you. They're not all as egregious as those. Those are certainly some of the worse. In Whittenbury v Vocation Ltd, $50 million in damages was awarded. Only 48 per cent returned to the class members, another 26 per cent taken by litigation funders and 25 per cent taken by the lawyers. The examples go on and on.
How are we trying to address that in this bill? The bill contains five fundamental elements. There is enhanced protection of the right of class action plaintiffs to choose whether to join a class action litigation funding scheme, a type of managed investment under the Corporations Act 2001. This is important because it's freedom of choice. The previous Labor speaker indicated that this was somehow removing people's rights, that they would somehow not be able to participate in class action lawsuits because of this. That's simply not true. It changes the default so that people who have joined a class action lawsuit have to consent to enter in part one of these litigation funding schemes.
Why? What's the practical thing that we're trying to achieve? When they enter these litigation funding schemes, we know from actual experience that they open themselves up to losing 43 per cent, 26 per cent, 50 per cent, 27 per cent of the damages they're awarded, before they even pay the lawyers, directly to the litigation funders so that they can get their profit margin, their yields, on their finance. It is right and proper that the default for people who are in a class action is that they have to consent to that. They have to be convinced that this is in their best interests. They may well consent, and they may consent for a variety of reasons: they don't want to put their own money into it, they can't get financing from somewhere else, it's a requirement from their lawyers—I don't know. They should have to be convinced of that. It shouldn't just be as a matter of fact. Somebody who's a class litigant shouldn't turn around at the end of the process and realise that 50 per cent of the damages they've been awarded have gone to feathering the beds and increasing the yields of the litigation funders.
I talk about the fact that this is not a broadsword but a scalpel; litigation funders will still be able to operate and they'll still take a clip because they are providing the funding. But in this legislation there's a rebuttable presumption that a distribution of over 30 per cent in total of the claim proceeds of the scheme to nonmembers of the scheme is not fair and reasonable, combined with court powers to approve or vary the distribution of the proceeds of the funded class action to ensure it is fair and reasonable.
What do those two, acting in concert, achieve? They give a presumption that the litigation funders can't take more than 30 per cent. They might even take less depending on what the court decides. Isn't that fair and reasonable? Should their yield on the financing be to such an extent that they need more than 30 per cent of the damages? That's essentially what Labor is arguing. The Labor speaker before me, the member for Cooper, said that we just want to leave it to the market to decide and let it rip. That's the opposite. We are actually trying to curtail the market here. If the market were 'let it rip', as it is now, litigation funders would simply take whatever margin they thought they could get away with, and, when people are vulnerable and they're trying to undertake a class action, that could be an awful lot, as we have seen.
What we're trying to do is in the interests of justice, in the interest of fairness and in the interests of ensuring that those who are wronged get the money that they are awarded by the court for the damages done so that they can rebuild their lives. We curtail the litigation funders to only take a fair and reasonable margin. Why is Labor against that? I don't understand it. I can only put it down to the fact that, again, a lot of the law firms that undertake these large class actions have deep roots in the labour movement and in the union movement. And at the end of the day we know that's the only thing Labor is interested in, not everyday Australians, fairness and justice but supporting their Labor mates.
I'm glad to make some remarks on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 and, in particular, to speak in support of the second reading amendment moved by the member for Whitlam. The bill is best summed up in the words of John Sheahan, from the Law Council of Australia, who described it as 'making things worse for everyone'. Unlike the previous speaker, this is someone with considerable expertise in the law with respect to the way our justice framework works, and his judgement is that the bill makes it worse for everyone.
The previous speaker, the member for Ryan, made some sort of attempt to suggest that the government is bringing in a bill that has at heart the interests of ordinary Australians and of people who have suffered very significant harm. That is rubbish. Class actions are vitally important. They help people who, usually through corporate malfeasance, end up suffering enormous harm. The best examples is asbestos, a toxic substance that has caused huge health consequences and death in the most terrible way for thousands and thousands and thousands of people. In some circumstances, justice for people—if you can describe financial compensation as justice for what they experienced—was only possible through class actions. There are many examples of that.
This bill seeks to make access to that kind of justice more difficult. The way in which it makes things worse for everyone springs from a number of different aspects of the government's conduct in general and its specific approach to this bill. The government has repeatedly shown no interest in advancing the cause of justice in this country. To have members of the coalition come in here and seek to pretend they're interested in the rights and opportunities of ordinary Australians, particularly Australians facing disadvantage, will come as a big surprise to all those in the community legal sector who have found themselves subject to funding cuts and uncertainty courtesy of this government. Everyone who is affected by or has a possible interest in the jurisdiction of the Family Court will find themselves surprised to see members of the government come in here and pretend they're interested in justice for those who need it most, when it wasn't that long ago that, against all advice, the government decided to abolish the Family Court. There was expert evidence from people working in that field who said the one thing you could guarantee from that outcome was that the lives of women fleeing domestic violence and the lives of their children would be made significantly worse and be put at risk as a result of those changes.
There's bad faith in the way this bill is presented. It's not intended to make access to justice easier and more affordable for everyday Australians. Like so many of the things this government has done, it's been done in the interests of reducing that access and allowing large corporations to go about their business without being held to account or held responsible for the things they occasionally get wrong.
And this bill has been done through a bad process. It was quite amusing to hear the member for Ryan say this bill has been brought forward on a thoughtful and considered basis. It has been rushed in here. The committee that considered it did so over three weeks. There was one public hearing. Public submissions were open for seven days. The majority report was provided literally seven days ago; Labor members of the committee received the report seven days ago and made their dissenting report on that basis. And here we are, seven days later, dealing with a bill that many people in the field regard as a very significant backward step.
I will go to a couple of those points. The first is the government's introduction of the rebuttable 70-30 cost split. The analysis by those who work in this area—and it's not people directly involved in the carriage of these matters but people like the Law Council of Australia and the Australian Law Reform Commission—has said that the crude and ill-considered change that the government is about to implement will have the effect of driving up litigation costs overall. So that's going to hit plaintiffs who are trying to receive compensation through these matters across the board. It's going to make settlements less likely, and settlements, we know, are one of the most effective ways of reducing costs in any legal dispute because they mean that you get to a point of conciliated resolution faster and less expensively.
It's also going to mean that there will not be funding for some meritorious claims. The reality of this world is that you will have a large, well-funded corporate defendant and you will have many people who, having been affected by the conduct of that defendant, have vastly different and inferior financial means to challenge that outcome and try to seek some sort of justice and compensation for the harm they have received. Litigation funding, whatever you say about it, actually enables that to occur.
I would be the first to say that, if the government wanted to embark on a broad program of reducing the cost of receiving justice, I would be happy to join them in that effort. They've got no interest in that more broadly. To come in here and try to suggest that it's the Labor Party that is the friend of well-heeled lawyers and large law firms is to enter into some sort of bizarre world. If the government wants to embark on a broad program of making justice more accessible and more affordable for Australians at every level, bring it on. After eight years, that would come as a surprise. But that's not what this achieves. This will actually mean that there will be meritorious claims that will not go forward. That means that there will be hundreds, and sometimes thousands, of Australians who have been harmed—they may have been harmed economically, but they may also have been harmed personally in terms of their health—and they will not be able to pursue justice and compensation because of the changes this government is making.
The opt-in requirement is particularly bizarre. No-one supports it. If you wanted to find one part of this bill that squarely went to the defendant protection racket part of it, it would be this. The member previously got himself into a real tangle on this. You can't, on the one hand, say that we're fixing the costs issue and then, at the same time, say we need people to opt in so they don't find themselves being on the end of unfair costs. If, in your own mind, you're fixing the costs issue—if that's what you are doing, which clearly isn't the case, but if that's what you're doing—then there's no problem anymore. The member for Ryan tried to pretend that people should actually sign up to some sort of unfair costs split. You're dealing with that, and therefore you surely should want as many people to benefit from a class action as possible. But that's not what this does. What it does is change the status quo. Rather than every relevant person being considered to have opted in and to be part of a class action and therefore potentially to benefit from it, this means having to opt out rather than having to opt in. This puts that obligation on them. It essentially means that, if people don't hear about it, don't know about it or are unconcerned about it and don't take the time to go and fill in some legal paperwork, they are not going to be covered. So it's going to exclude people who would otherwise benefit from class actions. As far as the plaintiffs are concerned, that will be a plain and certain outcome of this legislation.
Even from the defendant's side, what it means is that, rather than having one open class action that deals with the people who are affected, you're quite possibly going to end up with multiple, or even a succession of, closed class actions with different sets of plaintiffs, which, from the point of view of the defendant, just means that the process is more complex, more costly, more uncertain and more time-consuming. That goes to the point that I mentioned at the outset about this making things worse for everyone.
I actually do have some experience of class actions. I worked on behalf of plaintiffs, of claimants, who were injured through the use of the Dalkon Shield IUD. The Dalkon Shield was a very harmful contraceptive device and IUD, particularly in the 1980s and into the early 1990s. It ended up being, at the time, the largest torts matter in the world, certainly the largest after the asbestos cases. There were thousands and thousands of Australian women who were told that it was safe, some of whom were using that device as their first contraceptive device, only to suffer horrendous injuries. In some cases young women who had been told that this was perfectly safe subsequently had to have a total abdominal hysterectomy at the age of 19. They had their ability to consider having a family and future taken away from them by a faulty device, despite in many cases women going to the doctors and saying, 'This doesn't seem right; I'm experiencing some symptoms that concern me.' They were told: 'No, this is perfectly safe. This is a fantastic device, and you'll be fine.' That's what thousands and thousands of women, hundreds of thousands of women worldwide, experienced, and it was only through the class action that was started in the US that there was some compensation, very paltry compensation I should say, when you consider the magnitude of the injury that women suffered.
I was separately involved in, as a paralegal, a class action involving the insecticide called Helix. The drought in the 1990s meant cattle producers in Queensland and New South Wales had to rely on cotton trash as feed for their cattle. Unbeknownst to them, the cotton had been treated with an insecticide called Helix, which had a chemical in it that bioaccumulated in the tissue of the cattle and made them unsaleable. That cost those cattle producers hugely to, essentially, have their entire stock rendered valueless, because an insecticide company hadn't done its due diligence and it hadn't taken steps to ensure that—it's a fairly common practice that some kinds of agricultural products are fed to cattle in certain circumstances—there were proper warnings or that they avoided the use of some of the chemical components in that insecticide. It cost cattle producers their livelihoods, in some cases.
These are the kinds of things that class actions are required for. They have a very important place in our community and in our justice system. As colleagues of mine have said—the member for Bruce most particularly last evening—the Australian Law Reform Commission has talked about funding and enabling the use of independent cost assessors and contradictors in the Federal Court jurisdiction and those kinds of things. We are all for that. This is something that, if the government genuinely cared about these things, it could have done this year, last year, the year before that—in any of the last eight years. It could have got on and done some of that work, but no.
What the government is doing instead is rushing through this bill with a two- or three-week committee process, landing the report in the absence of a proper regulatory impact statement, which all parliamentarians should be concerned about. We don't actually have the benefit of a proper regulatory impact statement because what has happened in this case is that the Liberal majority committee report that was only provided last week has been deemed to have the character of some independent assessment, which is frankly bizarre. And this bill is being rushed through.
All of the people with expertise in this field, who have an interest in the proper conduct and carriage of justice and who have been advocates in the past for genuine reform that might have addressed costs issues, have judged this to be an absolute lemon; it is a dog with fleas, and yet here we are in the penultimate week of the parliamentary year having this rushed through. It is designed to protect the interests of large corporate defendants. It is designed to make it harder for ordinary Australians, whether they're cattle farmers or women who are injured by a faulty medical device or people injured through asbestos or anything else, to get fair and just compensation. It is a terrible piece of law and it should be rejected by this House.
Like the member for Fremantle, I was privileged to be educated with a law degree. And, like the member for Fremantle, I worked in the law before I came to this place. In fact I worked for a very large law firm in Adelaide before determining that I couldn't live in Adelaide and I needed to return home. Home for me is Mount Gambier, in the south-east of South Australia. When I did that I worked for a local practitioner before establishing my own firm. I say this because I reckon, of all the members in this House, I am perhaps one of the only people to have acted as a litigation funder. You might ask: how that could be? The majority of my practice involved working in the criminal law. I'll talk a little bit about that in a minute, in particular motive, and why perhaps those opposite are motivated to be debating this issue so voraciously.
In other fields of practice I would act on behalf of plaintiffs in personal injury claims. In those circumstances I would fund those proceedings where the plaintiffs had no capacity to meet my costs from day to day. Instead, I would carry that work in progress and finalise the matter in settlement, either at trial or ultimately when the matter settled. But that's where the similarity between the firm I operated and litigation funders ends, because, quite frankly, there was no return on that particular investment. Indeed, it would have been improper for me to do so. Fees were rendered in accordance with the work undertaken and, if successfully resolved, either by settlement or at judgement, my fees would be paid. If unsuccessful, then we would notch that down to experience and move on, because, quite frankly, the clients I acted for had no capacity to meet those fees independently.
I briefly mentioned the criminal law, and in criminal investigations I think the most important element is always to understand the motive of why someone may have acted in a particular way. It's certainly the approach taken by investigative authorities like the police. For those listening to this broadcast, I'd like you to pause for a minute and consider the motive of those opposite. I'm going to come back to that motive in a minute because I think it's incredibly instructive as to why we're seeing such strong, if you like, defence in this place of litigation funders.
Now, what's litigation funding about? Well, it's effectively about saying, in class action matters, that someone needs to pay the lawyers. As with my clients, there are circumstances where plaintiffs in class actions aren't in a position to do that. The class action industry in this country has embarked upon a campaign to try to scuttle this piece of legislation. In their advertisement, which is running on television, they try to paint this as the little guy versus big business. They say, 'If we all work together we can achieve our outcomes.' But the question becomes: what's the outcome? And the outcome to the ordinary viewer of that advertisement is about the little guy being appropriately compensated in circumstances where a court determines that they have been wronged in a way that sounds in damages. But that's not quite how it works, particularly when it relates to matters involving litigation funders. A recent Australian Law Reform Commission report indicated that, on review, those cases that involve litigation funders saw a median return to the plaintiffs of 51 per cent. You might say, 'Big deal.' Well, it is a big deal, because that same report went on to say that, in cases not involving litigation funders, the median return to plaintiffs was—wait for it, not 51 per cent—85 per cent. So, effectively, same plaintiff, same claim, same court, same wrong, same damages, but a very different outcome. We can measure that outcome. That very different outcome is a matter of 34 per cent. If a plaintiff has been wronged and is awarded damages of $100,000 then, in the case of not involving litigation funders, they can expect to pocket $85,000. But, in the case involving a litigation funder, that $100,000 awarded damages becomes $51,000. Same plaintiff, same court, same action, same damages, same compensation—different result.
The issue I have with this doesn't fall with practitioners. Practitioners need to be paid for the work they do, no question, and nor do I have a beef with someone who might step in as a litigation funder to meet the cost of that representation. But I do have an issue with those opposite suggesting that a provision in this bill, which effectively creates a rebuttal presumption—let's be clear about that; it's a rebuttal presumption, not a definitive position—that a distribution of more than 30 per cent in total of the claim proceeds of the scheme to non-members of the scheme is not fair and reasonable. In effect, what the law is saying is that courts need to determine, effectively, that these arrangements are fair and reasonable. And they will start from a presumption that anything more than 30 per cent being distributed other than to the plaintiffs is not fair and reasonable. Well, I reckon that's about right.
That's not to say that, in certain circumstances, you can't partition the court and indicate that this matter was of such complexity and such difficulty that there will need to be a greater proportion. It simply says that that's the starting position. I think people listening to this debate would reasonably say that people should benefit from the claims they bring in consequence of actions that have wronged them, and the damages that flow from those claims should rest with them—the majority of that benefit should rest with them. It shouldn't rest with litigation funders.
I think it's best that I give some examples, such as Liverpool City Council v McGraw-Hill Financial. The matter settled for $215 million—a whopping sum. The legal costs associated with achieving that outcome were $20 million, or nine per cent of the settlement proceeds. It is important we keep these numbers in mind: nine per cent of the settlement proceeds. Those that paid those legal fees, the litigation funders, received $92 million, or 43 per cent of the proceeds. To be clear, the lawyers charged and were paid $20 million for the plaintiff. Those who were paying the lawyers' bills paid that $20 million, but, in return for doing that, they were paid $92 million. Are we serious—43 per cent of the proceeds? This meant the plaintiffs—who, by the way, news flash, are the people that were wronged and that compensation was awarded to—received 48 per cent of those proceeds. So, having brought a claim and having obtained a judgement, they received less than 50 per cent of what they were awarded by the court.
Mr Deputy Speaker, you might ask me why I was so fixated on motivation. Quite frankly, I'm going to sound the bell here. I'm sure others have as well, but I'm going to ring it loud and clear. The member for Fremantle sought to suggest that the legal profession is in some way overwhelmingly centre Right. The reality, I expect, is that the legal profession, like the Australian population, is split right down the middle. I practiced the law, as did the member of Fremantle, proving the point. But the reality here—and I'd love anyone over there to take this point with me—is that plaintiff firms in Australia, particularly those specialised in class actions, are overwhelmingly, if not exclusively, Labor law firms. Great; fantastic! As I said, I have no particular issues with the legal fees paid here, but what I am particularly concerned about is the return on investment being achieved by litigation funders. And I've got to think to myself: who stands to benefit from this legislation being scuttled? The reality is that, disproportionately, litigation funders and, to some degree plaintiff law firms, and both of those cohorts are significant contributors, major donors, to those opposite. That's what we've got here, ladies and gentlemen.
For those out there listening to this debate, understand this: this is about protecting the Labor Party business model. That business model works as follows: 'We protect your ability to raise fees and achieve return on investment both as plaintiff law firms in class actions and as litigation funders. We protect that circumstance for you and, in return, of course, you will bulge our election-time coffers with contributions to the campaign.' There it is. This is a model that has been used ad infinitum by the union movement for a very long time. They often settle workers compensation matters. They step in, provide assistance to plaintiffs in those circumstances, injured workers, but then—and many members of this place and those listening otherwise might not know this—they take a significant cut of that compensation.
I would have thought that those opposite, if they bear true to the traditional Labor values, would step in, do that work, ensure workers are compensated appropriately and take almost no compensation other than the union due that was paid by every single member in support of those individual members who were impacted more disproportionately. But that's not what they do, because it is a business model—just like this is a business model—and they want to protect it. I have to tell you that it is an incredibly lucrative business model. As I said, $215 million worth of damages, with $92 million paid to the litigation funders and $20 million to the lawyers, leaving the plaintiffs—the plaintiffs; those that were wronged—with a mere 48 per cent of the judgement.
Well, quite frankly, the gig is up. We on this side have identified this as a real issue. We are not suggesting—like those opposite are—that this will be the end of class actions in Australia and that they will fall by the wayside. Of course, they won't! We are simply saying: give the plaintiffs a fair go. Don't take advantage of the fact that they don't have the resources, the means and the wherewithal to pursue their claim and, in circumstances where they are at that disadvantage, don't effectively hoodwink them into an arrangement which will see much of their compensation shoehorned to the litigation funders and effectively thereafter diverted in donations to the ALP. Don't do that. Create a circumstance where people are appropriately compensated and lawyers and those that provide capital to fund litigations are appropriately compensated. Who in their right mind would think that a contribution of $20 million paid over time to the plaintiff's lawyers should result in a dividend to litigation funders of $92 million? That's a 400-plus per cent return on investment. That's not fair for the plaintiffs who were injured, suffered loss and were compensated. It's not right, and those opposite know it. I expect better from them.
I began my career as a lawyer a long time ago. I've since transitioned to becoming an economist. That's a transition, some people might say, that has both an unpleasant beginning and an unpleasant end, but that's an issue I can deal with at another time. Reflecting upon this bill, the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021, took me back to the early days in my career at the Attorney-General's Department, and it took me back to a maxim: justice delayed is justice denied. It's very much at the core of our legal system and goes to the issue of whether or not the legal system is denying the provision of justice in such a way that it is meaningful to a person who is seeking redress. It struck me that delay is indeed a denial of justice, but an even more fundamental denial of justice is to not even have access to legal representation and to the court system in the first place, and that is what we're dealing with today. What we're dealing with today, in my opinion, is, for many people and many classes of dispute, the most fundamental issue of access to justice. If we fundamentally weaken class actions in the way that I will argue this bill does, we will be denying many people justice in a most profound and egregious way.
Those opposite have stated that this bill is about scalpels and tweaking and improving at the margin—that it's about the way in which we distribute claim proceeds. What I'm going to argue is that it is nothing of the sort; that it goes to the heart of the way in which class actions operate in this country, and in a bad way; that it cuts them off at the knees; and that it will make it so much harder for people to participate in class actions in practice. That's the first argument.
The second is that this is manifested not just in the merits of the issue, which I will run through, but also in the way in which this is being brought here. It has been a completely atrocious process. This government is clearly trying to sneak this bill through after an abridged process in which a biased committee didn't listen to the preponderance of independent expert evidence. So we have an atrocious process leading to a flawed bill that isn't about what it is supposed to be about but is really about cutting off class actions at the knees.
That leads to the third argument, which is that this is a bill that is full of unintended consequences, and I will deal with just a few of them as I only have 15 minutes. It's a bill which is appallingly designed and which will have terrible unintended consequences.
Fourthly, not only is it a very flawed intent and an abridged, appalling process leading to unintended consequences but we have a bill that is possibly unconstitutional, which the second reading speech and the majority committee report on the bill don't really address in any substantive way. What we have here today is a bill driven by ideology, not by rigour or evidence. That is, as I said earlier, reflected in the fact that the preponderance of evidence was simply ignored by the majority members of the committee.
Let me go to the first issue which I want to address in this contribution, which is that this is not a tweak or a scalpel; this is going to attack class actions at their very heart. This bill is going to change the requirements such that class members will not now opt out but rather will agree in writing to be members of a litigation-funding scheme and be bound by the scheme's constitution. The current model and its advantages have been well summarised by the Law Council of Australia:
Part IVA of the Federal Court of Australia Act … which contains the federal class action regime operates on the … basis of an opt-out structure. Under this system a class action can be commenced without the express consent of group members … The opt-out structure was recommended by the Australian Law Reform Commission … because it promotes access to justice and efficiency. Group members who cannot be identified at the outset or who are unable to elect affirmatively to participate due to social or economic barriers are not excluded from the legal system and a potential remedy.
There has been a great deal of research in recent years, in psychology, economics and many social sciences, which points to the fact that opt-out schemes work in a materially significant way to improve participation rates. We know that if you move from an opt-out arrangement to an opt-in arrangement, particularly where there is great complexity, we know who the people are that will drop out and won't participate—it's going to be people who are vulnerable. This is in fact a problem that the Australian Law Reform Commission explicitly identified when it said that the opt-out arrangements are particularly important for large classes of potential claimants in rural, regional and remote communities.