Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the Corporations (Aboriginal and Torres Strait Islander) Bill 2006 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CORPORATIONS (ABORIGINAL AND TORRES STRAIT ISLANDER) BILL 2006

The Corporations (Aboriginal and Torres Strait Islander) Bill 2006 replaces the Aboriginal Councils and Associations Act 1976.

Over several decades, expenditure on Indigenous affairs has increased dramatically and much of this specific funding is delivered through Indigenous community organisations. It is estimated that there are over 8,000 Indigenous community organisations registered with the various corporate regulators—about 3,000 of these are registered under the Aboriginal Councils and Associations Act. Reducing Indigenous disadvantage depends in no small part on ensuring that these Indigenous corporations are well governed.

The Aboriginal Councils and Associations Act was developed in the 1970s to cater for the small number of land holding corporations linked to the first land rights legislation. It was meant to offer a simple process for incorporation with a minimal need for regulation.

The Aboriginal Councils and Associations Act is not adequate today given the high numbers of Indigenous corporations and their diversity, and also given developments in corporate law and other areas such as native title.

The bill responds to the present day problems faced by Indigenous corporations. It aligns corporate governance requirements with modern standards of corporate accountability, while allowing flexibility for Indigenous corporations to tailor their arrangements to suit their own special circumstances.

The bill offers an important contribution at a fundamental turning point in Indigenous affairs. Indigenous corporations are crucial to many Indigenous Australians and in remote areas they are crucial to non-Indigenous residents as well. They are the life-blood of many communities, holding land and native title, providing essential infrastructure such as power and delivering the most basic of services such as medical care—it is not appropriate for them to have lower corporate governance standards.

It is a very practical Bill that empowers Indigenous people to structure their corporations to create the best outcomes for their communities. It also allows for a range of assistance from training to a rolling program of ‘good governance audits’.

The bill includes increased rights for members, consistent with the Corporations Act, and provides greater opportunities for members to act to protect their own interests. In addition, the Registrar will be able to act on behalf of members in circumstances where they are unable to do so, for example, in the case of an oppressed minority.

The bill has been subject to extensive and thorough consultation. An independent review of the Aboriginal Councils and Associations Act was commissioned by the Registrar in 2001. The review was led by law firm Corrs Chambers Westgarth and team members included specialists Senatore Brennan Rashid, Professor Mick Dodson, Christos Mantziaris and Anthropos Consulting.

There were several rounds of consultations and two workshops in Alice Springs. In addition, questionnaires were sent to all associations incorporated under the Aboriginal Councils and Associations Act and to 345 Indigenous organisations incorporated under other Commonwealth, state and territory legislation. There was extensive advertising in local and rural media, information sheets and consultation papers.

The bill is broadly in line with recommendations of that review.

The threshold question was whether there is a need for specific legislation for Indigenous corporations. It is clear from the consultations that many Indigenous corporations need special support and regulation tailored to their circumstances, such as remoteness, capacity, culture and to meet the requirements of special statutory regimes including native title.

This flexibility and the special measures required are not available from other corporate regulators such as ASIC, which are primarily concerned with relatively large trading corporations.

However, special legislation needs to be consistent with current basic practices of other corporate regulators. Therefore, the backbone of the bill is the application of mainstream corporations law to Aboriginal Councils and Associations Act corporations—for example, it largely replicates modern standards of duties for officers, directors and employees that exist in the Corporations Act.

During the consultations, Indigenous peoples themselves called for strong accountability requirements for corporations and their directors and managers, flexibility to tailor and more capacity development measures.

The bill overcomes regulation gaps—for example, managers of Indigenous corporations will now have duties like those of directors and will no longer be able to escape scrutiny. Directors and managers can be disqualified and their names put on a register of disqualified directors so that they will be clearly visible to other corporations. The Registrar of Aboriginal and Torres Strait Islander Corporations, unlike under the provisions of the current Act, will be able to check subsidiaries and trusts related to Indigenous corporations, some of which hold substantial funds and assets.

To protect the members of corporations, funding bodies and ultimately the Australian taxpayer, a range of offences are covered in the bill. The offences largely reflect those set out in the Corporations Act and have been developed on the principle that similar obligations should attract similar consequences.

The bill allows for flexibility so that corporations can tailor their corporate governance practices to better suit their members and communities. Most corporations are likely to use the sensible internal governance framework built into the bill, others will choose to modify it. Support and training will be available through the Office of the Registrar of Aboriginal and Torres Strait Islander Corporations, to help them through the process where it is needed.

Special measures that address the unique circumstances of many Indigenous corporations have been a key consideration in the bill’s development. One such measure allows the Registrar to appoint a special administrator—a modernisation of a measure currently available under the Aboriginal Councils and Associations Act.

This measure is an important safeguard to protect the interests of those communities that might otherwise suffer the consequences of corporate failure.

One corporation currently under the control of this sort of special administrator provides all the power for a remote community, from the local school to the medical service and police station. Clearly a special power is needed to deal with the risk of corporate failure especially when it could threaten a community’s essential services and, indeed, existence.

Importantly, for the first time the bill will provide persons affected by key decisions of the Registrar to have these decisions reviewed by the Administrative Appeals Tribunal.

The bill has a strong focus on reducing red tape for smaller corporations, which will have less reporting requirements in proportion to their size. Larger more sophisticated organisations will have more rigorous reporting arrangements in line with modern corporations law.

The bill allows support for good dispute resolution. While not having a direct role in conducting mediations, the Registrar can help in the development of dispute resolution processes.

To further support capacity building in these corporations a key feature of the bill allows the option of appointing experts to Boards, even if non-Indigenous.

The provision of practical assistance and training will now be underpinned in legislation.

The new arrangements will commence on 1 July 2007 allowing time for Indigenous corporations to make the necessary changes.

The bill has been subject to scrutiny and report by the Senate Standing Committee on Legal and Constitutional Affairs. A number of parliamentary amendments introduced by the Government in the House of Representatives have been incorporated into the bill as a result of the Committee’s work and further consultation with and feedback from stakeholders. These amendments refine and enhance the operation of the bill. They also offer greater flexibility than the bill originally provided for. For example, while Boards of no more than 12 are desirable, the bill, as amended, will allow an exemption for a larger Board where this is reasonable. This further improves the flexibility of the legislation.

Other provisions in the bill deal with the voluntary transfer and amalgamation of Aboriginal and Torres Strait Islander corporations. This supports the purpose of the bill as a framework for incorporation that meets the special risks and requirements of the Indigenous corporate sector. The new provisions will allow a body corporate registered under another law to seamlessly transfer its registration to the bill if certain requirements are satisfied. For example, it will allow an Indigenous-controlled association incorporated under a state law to easily transfer its registration to the bill.

Similarly, an Aboriginal and Torres Strait Islander corporation will be able to transfer its registration to the Corporations Act, or a law of a state or a territory. A large commercial Aboriginal and Torres Strait Islander corporation, for example, may decide that its future development would be best served by incorporation under the Corporations Act. These provisions will allow the smooth transition of such corporations and provide corporations with the choice to incorporate under the regime that suits them best.

Other provisions will enable an Aboriginal and Torres Strait Islander corporation to amalgamate with other Aboriginal and Torres Strait Islander corporations, either by an administrative process approved by the Registrar or by applying to a court. Such amalgamations will be voluntary and may be desirable when a number of different Aboriginal and Torres Strait Islander corporations service a particular area or Indigenous group.

The bill is part of a legislative package which includes the Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006 and the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006.

This comprehensive legislative package provides the flexibility to accommodate the diversity of Aboriginal and Torres Strait Islander corporations. It reflects international best practice in Indigenous corporate governance and will help to produce better outcomes for Indigenous Australians.

CORPORATIONS AMENDMENT (ABORI-GINAL AND TORRES STRAIT ISLANDER CORPORATIONS) BILL 2006

This Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Bill 2006 amends the Corporations Act 2001. The amendments ensure that the Corporations (Aboriginal and Torres Strait Islander) Bill 2005, which was introduced in June last year, interacts appropriately with the Corporations Act 2001.

These amendments to the Corporations Act make it clear that a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Bill 2005 is a corporation for the purposes of the Corporations Act.

The amendments remove areas of doubt, close potential regulatory gaps and remove confusion that would arise if there were dual regulation by both the Australian Securities and Investments Commission and the Registrar of Aboriginal and Torres Strait Islander Corporations.

The amendments also make sure that a person disqualified from managing a corporation under the Corporations (Aboriginal and Torres Strait Islander) Bill will also be disqualified from managing a corporation under the Corporations Act.

Consistent with the requirements in the Corporations Agreement 2002, state and territory ministers have been consulted regarding these reforms through the Ministerial Council for Corporations and have approved the bill.

These amendments are a small but important part of a broader package of reforms that will improve Indigenous corporate governance and help to produce better outcomes for Indigenous Australians.

CORPORATIONS (ABORIGINAL AND TORRES STRAIT ISLANDER) CON-SEQUENTIAL, TRANSITIONAL AND OTHER MEASURES BILL 2006

The Corporations (Aboriginal and Torres Strait Islander) Bill 2005, introduced in June last year, is intended to repeal and replace the Aboriginal Councils and Associations Act 1976.

This Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Bill 2006 sets out the transitional arrangements for corporations moving from the old Act to the new.

The Aboriginal Councils and Associations Act was developed in the 1970s to cater for land holding corporations linked to the first land rights legislation. It was meant to offer a simple process for incorporation with a minimal need for regulation. However, the Act is no longer adequate.

There are now 2,500 organisations registered under the Act. As the sector grew, Indigenous Australians became more dependent on these organisations for the provision of services, including essential services and management of assets. They are responsible for hundreds of millions of dollars of public funding for income and assets. Indigenous Australians want these organisations to operate efficiently and to be more accountable to them.

With a view to modernising the operation of the sector, the Registrar of Aboriginal Corporations commissioned an independent review of the Act in 2001. The review was led by law firm Corrs Chambers Westgarth. Team members included specialists Senator Brennan Rashid, Professor Mick Dodson, Christos Mantziaris and Anthropos Consulting.

The review took almost two years to complete. Questionnaires were sent to all corporations under the Act as well as to 345 Indigenous corporations incorporated under other legislation. Advertisements were placed in all key Indigenous publications. There were several rounds of consultations and two workshops in Alice Springs. Information sheets and consultation papers were distributed widely.

The report of the review was made available publicly for comment in December 2002. The Government presented its response to the review in January 2004, after considering further submissions. The bill, introduced in June 2005, largely reflects the recommendations of the Review.

The threshold question was whether there was a need for specific legislation for Indigenous corporations. It was clear from the consultations that many Indigenous corporations need special support and regulation tailored to their circumstances. Their incorporation legislation also needs to meet the requirements of special statutory regimes including native title.

The flexibility and special measures required are not available from other corporate regulators such as ASIC, which are primarily concerned with relatively large trading corporations.

However, special legislation needs to be consistent with current practices of other corporate regulators. Therefore, the backbone of the reform is the application of mainstream corporations law to these corporations—for example, the reforms largely replicate modern standards of duties for officers, directors and employees that exist in the Corporations Act.

The reforms also overcome regulation gaps—for example, managers of Indigenous corporations will now have duties like those of directors and will no longer be able to escape scrutiny. Directors and managers can be disqualified and their names put on a register of disqualified directors so that they will be clearly visible to other corporations. The reforms include strong measures to avoid nepotistic behaviour. Importantly, the Registrar will be able to check subsidiaries and trusts related to Indigenous corporations, some of which hold substantial funds and assets.

To protect the members of corporations, funding bodies and ultimately the Australian taxpayer, a range of offences are covered in the bill. The offences largely reflect those set out in the Corporations Act and have been developed on the principle that similar obligations should attract similar consequences.

Special measures that address the unique circumstances of many Indigenous corporations have been a key consideration in the CATSI Bill’s development. One such measure allows the Registrar to appoint a special administrator—a modernisation of a measure currently available under the Aboriginal Councils and Associations Act.

This measure is an important safeguard to protect the interests of those communities that might otherwise suffer the consequences of corporate failure especially when it could threaten a community’s essential services and infrastructure such as municipal services.

Corporations will be able to tailor their corporate governance practices to better suit their members and communities.

Smaller corporations will have less reporting requirements in proportion to their size. Larger, more sophisticated organisations will have more rigorous reporting arrangements in line with modern corporations law.

The changes offer a practical response to the need for good governance in Indigenous communities: Indigenous people can structure their corporations to create the best outcomes for their particular needs. It allows for the Registrar to provide a range of assistance from compliance support to a rolling program of ‘good governance audits’.

Since the introduction of the bill there has been further consultation. It has been subject to scrutiny by the Senate Legal and Constitutional Affairs Committee for almost 12 months. We will be introducing a number of amendments some of which are a result of the committee’s work. Those amendments will offer greater flexibility than the bill originally provided for.

This bill consists of three schedules—amendments to the Native Title Act 1993, consequential amendments and transitional provisions.

Schedule 1 to the bill sets out amendments to the Native Title Act 1993 that correct a technical problem relating to corporations formed to hold or manage native title.

Schedule 2 to the bill sets out consequential amendments. It also repeals the Aboriginal Councils and Associations Act.

Schedule 3, sets out the transitional provisions providing a seamless transfer of corporations. These provisions preserve the legal status, office bearers, assets and liabilities of corporations in their pre-commencement form. This is designed to minimise the administrative burden on corporations while providing certainty of operation for corporations, their members and stakeholders.

While the new arrangements will commence on 1 July 2007, transitional corporations will have up to two years to meet the requirements of the new Act.

Support such as an 1800 hotline, do-it-yourself tools, troubleshooting sessions and compliance training on the legislation will be available through the Office of the Registrar of Aboriginal and Torres Strait Islander Corporations, to help corporations through the process where it is needed. The Registrar’s office has already embarked on some of these measures. A recent $28 million Budget initiative to strengthen the capacity of Indigenous corporations will include funding associated with implementation of the bill.

The reforms will improve Indigenous corporate governance and will help to produce better outcomes for Indigenous Australians. These consequential, transitional and other measures assist implementation and ensure the success of Indigenous corporations and ultimately Indigenous Australians.

Debate (on motion by Senator Santoro) adjourned.

Ordered that the resumption of the debate be an order of the day for a later hour.