Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023. The coalition will be supporting this legislation. This legislation implements reforms led by the former coalition government that reduce red tape, lower the cost of doing business and support digital innovation in the delivery of core business functions.

This bill reintroduces measures advanced before the election to modernise annual general meetings and other business communication rules and provides an initial response to the Australian Law Reform Commission's review into financial services legislation. This bill revives and expands legislation that was introduced prior to the last election. The main body of additions to the bill implement initial recommendations from the Australian Law Reform Commission's review into financial services legislation, commissioned by the previous coalition government. The bill implements law improvement measures across four streams: technology neutral communications in schedule 1, recommendations of the ALRC in schedule 2, the rationalisation of ASIC instruments in schedule 3 and minor and technical amendments in schedule 4. The amendments in schedules 2 to 4 are largely made with existing policy parameters.

Schedule 1 to the bill amends the Corporations Act and other Commonwealth acts to modernise communication methods available to consumers, businesses and regulators when interacting with each other by extending the global communications regime, allowing members of certain entities to elect to receive documents in either hard copy or electronic form and providing relief to entities that are unable to contact members under the Corporations Act; ensuring that regulatory bodies and the Treasury portfolio can hold hearings and examinations using technology; updating payment provisions in Treasury laws to allow electronic payments to be used; and, finally, replacing requirements in Treasury laws to publish notices in newspapers with a requirement that notices be published in an accessible and reasonably prominent matter.

Schedule 2 to the bill implements recommendations and other suggested improvements identified by the ALRC in its first interim report to simplify and improve the navigability of Australia's financial services laws. In an interim report, the ALRC found that Australia's financial services legislation is challenging to navigate and complex for individuals and businesses who may have obligations under the law.

Schedule 3 to the bill amends the Corporations Act and the National Consumer Credit Protection Act to transfer long-standing and accepted matters currently contained in ASIC legislative instruments into the primary law. The amendments will improve navigability of the law and provide industry and consumers with greater certainty and clarity when interacting with Treasury.

Schedule 4 to the bill makes a number of miscellaneous and technical amendments to Treasury portfolio legislation. The amendments correct drafting errors repealing operative provisions, address unintended outcomes and make other technical changes. Combined with further reforms of the coalition, this bill is expected to reduce the regulatory burden for businesses by more than $500 million per year.

Independent research has estimated that the annual cost to the economy of red tape is at $176 billion a year. Red tape's costs to the economy are more than just the direct cost; of course it includes businesses that have never started, jobs that are never created, and the ambitions that are never fulfilled because of bureaucratic interference. Many businesses you talk to will tell you that the cost and burden of compliance is, along with staff shortages, their No. 1 issue. This project is no small task, with the Treasury portfolio laws covering more than 50 acts that contain thousands of provisions, spanning corporations law, taxation, competition and consumer policy, and financial sector regulation. This needs to be the beginning, not the end, of reducing red tape and supporting deregulation for Australian businesses.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens will be supporting the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023, so what I want to do in my second reading contribution is basically foreshadow the amendment to this legislation that we intend to move. It's the amendment on sheet 1796, which has been circulated in the chamber and is standing in my name. That amendment would repeal changes made by the previous government two years ago that weakened Australia's continuous disclosure laws and weakened Australia's misleading and deceptive conduct provisions.

Under the pre-COVID continuous disclosure regime, which was introduced by the Howard government in 2001, companies and directors were required to disclose publicly any information that was not generally available and that a reasonable person would expect to have a material effect on a company's share price. If a company or company director failed to comply with these obligations, they could face a civil penalty action either by shareholders or by ASIC. However, a director was not liable for a civil penalty proceeding for breaching those obligations if he or she took all reasonable steps to ensure that the company complied with its disclosure obligations and, after taking those reasonable steps, believed that the company was complying with its obligations.

But, as a result of the changes made by the previous government, the situation now is that companies and directors that failed to disclose price-sensitive information, either at all or in a timely fashion, are liable to shareholders for that failure only if the company or director acted with knowledge, recklessness or negligence. That means it's now easier for companies and directors to get away with failing to provide price-sensitive information to the market. It means it's now easier for companies and directors to get away with withholding information from or providing misleading information to the market and shareholders. The only reason given by the previous government for the changes it made was the asserted need to protect Australian companies and directors from the risk of opportunistic class actions.

The changes made by the previous government put the interests of individual company directors above the interests of mum and dad investors. Even then, not all business organisations supported these changes. In a 2020 survey of 195 senior company executives that was conducted by the law firm King & Wood Mallesons, 80 per cent of company executives said that the changes made by the previous government were a bad idea. The previous arrangements were pro-shareholders. The government's changes were against the interests of shareholders, and they should have been rejected.

Now, Senators, I've got a confession to make. Up until now my speech has been entirely plagiarised. Up until this point—save for an introduction and putting the previous government's changes in past tense—I have recited verbatim from the speech given by the now minister, Mr Jones, in his second reading speech in the House on 15 March 2021 to the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 that introduced changes to continuous disclosure obligations. I have to say, I really couldn't have made a better case for why the previous government's changes that watered down continuous disclosure obligations need to be overturned than the case that was then made by the now minister when he was in opposition. I couldn't have made a better argument as to why the government should support the Australian Greens' amendments today, because that was exactly the position taken by the now minister Mr Jones when he was in opposition.

So I really hope that the government's able to support our amendments, because disclosure of information of the type that is caught by these amendments is critical to the functioning of a market. People have a right to know what's going on inside companies so they can make better-informed investment decisions. Continuous disclosure obligations never should have been watered down. Today we are giving the Senate and this parliament an opportunity to correct that error.

Malarndirri McCarthy (NT, Australian Labor Party, Assistant Minister for Indigenous Australians) Share this | Link to this | Hansard source

I would certainly like to thank those senators who have contributed to this debate. This bill contains measures designed to maintain and improve Treasury portfolio legislation to ensure it remains current and fit for purpose. Schedule 1 modernises several Treasury portfolio laws by amending prescriptive provisions that tie businesses to traditional inefficient methods of communication. It expands the scope of documents covered by the Corporations Act 2001 that may be signed and communicated electronically.

The relief currently provided by the Australian Securities and Investments Corporation, ASIC, to entities attempting to contact lost members will be legislated and amended. Requirements to publish notices in newspapers will also be replaced with the requirement to ensure the notices are published prominently and are easily accessible. Amendments to several Treasury portfolio laws will make it clear that electronic payment options are available, and that Treasury portfolio regulators can hold hearings and examinations virtually. These reforms will remove barriers to efficient business operations and reduce costs for consumers, businesses and regulators.

Schedule 2 reduces the complexity of Australia's financial services laws, as recommended by the Australian Law Reform Commission in its interim report A of its review of the legislative framework for corporations and financial services regulations.

The amendments address complexity in the design of definitions in the corporation and financial services law, including by removing redundant definitions and using consistent headings for definition sections. This is designed to facilitate a more adaptive, efficient and navigable legislative framework within existing policy parameters. Schedule 3 transfers long-standing and accepted matters contained in ASIC instruments into the Corporations Act 2001 and the National Consumer Credit Protection Act 2009. The amendments will improve the clarity of the law, provide certainty and make it simpler for regulated entities and consumers to understand their rights and obligations.

Schedule 4 makes minor and technical amendments to Treasury portfolio legislation and this includes amendments that clarify the law to ensure it operates in accordance with the policy intent, make minor policy changes to improve administrative outcomes or remedy unintended consequences and correct technical or drafting defects.

I'd just like to go to Senator McKim's amendments and to his speech. Thank you for your contribution, Senator McKim. I know you've been enormously passionate in pursuing this over a very long period. But I do have to say we will not be accepting the amendments that will be moved by the Australian Greens relating to continuous disclosure obligations. While Labor did not support this measure when it was introduced in 2021, amendments ensured there would be a statutory review after two years. That review is about to commence, and we will wait for the review's findings before proceeding with any further change in this area. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.