Senate debates

Monday, 9 August 2021


Treasury Laws Amendment (2021 Measures No. 1) Bill 2021; Second Reading

6:52 pm

Photo of Jess WalshJess Walsh (Victoria, Australian Labor Party) Share this | Hansard source

[by video link] I'm pleased to speak on the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. Labor supports schedule 1 of this bill, which seeks to make virtual AGMs an ongoing feature of our corporate landscape, because that is necessary in these extraordinary times. The Morrison government, as we all know, had two jobs this year: effectively roll out the vaccine and create purpose-built quarantine facilities. As we all know, they failed at both. It's 2020 all over again, and during these uncertain times businesses need to be able to function in socially distant ways and continue their work. That's why extension of virtual AGMs is an absolute no-brainer in the current environment. Virtual AGMs allow businesses to carry on with their work and still meet their obligations to shareholders.

It is really important, though, that these AGMs function as effectively as in-person AGMs, and shareholders and consumers must continue to be afforded transparency and the chance to voice their concerns, pandemic or not. But this government is using the pandemic as an excuse to try and make other permanent and damaging changes to Australian corporations law—changes that Labor just cannot support. Schedule 2 of this bill is the government's attempt at watering down the continuous disclosure obligations that absolutely underpin confidence and integrity in our markets.

In May 2020, the Treasurer used emergency COVID-19 powers to water down John Howard's continuous disclosure obligations. Those changes, which the government is seeking to make permanent today, make it easier for company directors to withhold price-sensitive information or to provide misleading information to shareholders by making it harder for shareholders to take action against dodgy directors. Australia's strong corporate disclosure laws are an absolute cornerstone of our investment framework in this country. These laws protect shareholders. That is what they are there to do, and they make Australian businesses stronger. The high integrity of and trust in Australia's markets are a direct result of the current regime, and it should not be watered down.

Australian markets are unique from others due to the high rate of retail investments, and it's women, particularly older women, who are participating in our markets with renewed confidence and greater financial literacy than ever before. The Senate inquiry heard evidence from Professor Peta Spender that there is a growing rate of direct investment from women and from young people, or 'millennials' as she called them. Professor Spender said:

… retail investors don't have the same access to information that the institutional investors have. They've got some hesitancy about information, and that's reflected through the ASX investor survey.

Strong continuous disclosure laws empower women and empower young people to invest. They underpin confidence. They underpin confidence that our markets are being held to high standards regarding timely and accurate information, so it is crucial that investors have as complete a picture as possible when they're making choices between different opportunities. When the exchange of information about a company's performance does not live up to the expectation of honesty and transparency then trust in our markets begins to erode.

This government has a history of backing the interests of certain market participants over an even-handed approach that would actually create and maintain the efficient markets that we have in Australia. Schedule 2 of this bill is the government's next step in the latest rebalancing of interests—a rebalancing that puts the interests of a small number of company directors above the interests of mum-and-dad investors and above the interests of those women and young people who are investing more than ever before in Australia's markets. It puts the interests of a small number of company directors above the interests of self-funded retirees as well.

There has also been a complete lack of consultation on this legislation. In December 2018, the Australian Law Reform Commission recommended a comprehensive review of the continuous disclosure laws. The recommendation was clear that any such review would need to undertake wide consultation. Not only did the government fail to act on that recommendation almost three years ago; today, with this legislation, they are ignoring it entirely. During the committee inquiry into this bill, the Treasury admitted that neither it nor the Treasurer had consulted with any external stakeholders in relation to schedule 2 of this bill. Bank Reform Now, another witness at the hearings, noted that the lack of consultation was, in their word, 'suspicious'. They said this government was pushing this agenda for various reasons which aren't in the interests of the community or shareholders. So, if these changes aren't in the interests of the community, why is the government pushing them through?

The main reason the Morrison government has offered for these changes is the supposed threat of opportunistic class actions by shareholders. The thing is that the Morrison government have completely failed to define or say what it is they mean by the term 'opportunistic shareholder class actions'. Our best guess is that this government thinks that all class actions are opportunistic, whether they're brought by shareholders or any other group of Australians. This government have a bit of experience with class actions, like the one brought against them by the victims of the Prime Minister's illegal robodebt scheme—a scheme that saw $1.5 billion in unlawful debt notices given to 600,000 vulnerable Australians. I wonder if they considered that class action opportunistic? Instead of learning the lesson and improving governance, the Morrison government has chosen to take revenge on all class action lawsuits. According to this government, class action litigants are the problem, and that includes investors in public companies.

Lets be clear: the Morrison's government's obsession with class actions has no basis in facts. Shareholder class actions make up well under one per cent of cases filed in the Federal Court. The CEO of Omni Bridgeway, Mr Andrew Saker, gave evidence at a committee hearing and quoted research which found that, from 1992 to 2019, only 63 companies or corporate groups had class actions filed against them on behalf of shareholders. When I asked him to comment further, he described this narrative from the government as a myth. He told us that there has been a downward trend over the last three years in regard to shareholder class actions. So it's not so much the worrying trend that this government has made it out to be.

However, there is one trend that we should all be worried about, and that is the dangerous trend emerging from the Morrison government—a trend towards secrecy, a trend against transparency that can be seen across a range of corporate law reforms. It is a trend that must be stopped. ASIC have referred to Australia's pre-COVID continuous disclosure laws as a 'fundamental tenet of our markets'. They say that these laws are 'particularly important during times of market uncertainty and volatility'. They say:

The economic significance of fair and efficient capital markets dwarfs any exposure to class action damages.

So, if we want a strong economic recovery, we need strong markets and we need consumer confidence. This government is using the pandemic as an excuse to make permanent and damaging changes to Australia's corporations laws—changes that would weaken our markets just as we are trying to recover, changes that would take away the rights of shareholders to hold companies and company directors to account, changes that would stifle the growth of women and young people investing in our markets. Those opposite have once again shown that they are not on the side of ordinary Australians: mum and dad investors, ordinary workers, Australians trying to save for their retirement. The Morrison government is not on their side.


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