Bruce Baird (Cook, Liberal Party) Share this | Hansard source

It is my pleasure to rise to support the Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Bill 2007. I am wholly supportive of this legislation, which will help us to build a strong economic relationship between our two countries. It builds on the strength that has been developed from the Australia-New Zealand Closer Economic Relations Trade Agreement, forged in 1983, which has governed and shaped Australia-New Zealand relations. That agreement has been of great benefit to both countries, and this legislation will further develop that closeness, in an economic sense, that has been developed over the past 20-odd years.

Last June-July, the Trade Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade, of which I am chairman, travelled to New Zealand to look at the various implications of this agreement and, more broadly, the economic and trade relations between the two countries. The first and most important comment to make on our review is that we found how successful the CER between the two countries has been, the great achievement it has produced and how everyone is looking towards the ways in which we can further develop the relationship. We looked at how we could remove some of the regulatory complexities between the two countries and at questions of accreditation. Overall, it was seen as a great success; we did have some areas to move in but we covered over 80 per cent of the key areas that needed to be addressed.

A need was seen for a central body to oversee the CER. That arose from one of the criticisms made by the committee. Because of the diversity of operations between various portfolios, whether they be telecommunications, treasury, trade or transport, we needed some central body to be brought together to deal with the concerns that people were addressing in the CER. That was one of the recommendations that went forward to cabinet.

In July this year the House of Representatives Standing Committee on Economics, Finance and Public Administration, of which I am the chairman, will be visiting New Zealand. We will be looking at some of these elements of our economic relationship. We will be meeting with representatives of New Zealand’s central bank and various other leaders of its economic and financial community. This committee will certainly be looking at ways by which the CER can be developed and improved.

The purpose of this legislation is effectively to work towards a single economic market for Australia and New Zealand with common regulatory frameworks. On the legal side, there is currently a memorandum of understanding on the coordination of business law between Australia and New Zealand. This legislation in part implements some of the aspects of that MOU.

The report by the Trade Subcommittee last July was unswerving in its endorsement of the 1983 agreement with New Zealand, our first ever free trade agreement. Since then we have gone on to have free trade agreements with Singapore, Thailand and the United States. In fact, the United States agreement received the highest ever vote in the US House of Representatives and Senate to endorse any free trade agreement. Now we are negotiating possible free trade agreements with Japan, China and the Gulf countries. Also, initial discussions are taking place with Mexico.

The agreement with New Zealand is our first and undoubtedly our most successful. There are a number of dimensions to our economic relationship but the major areas are tourism, trade and people, whether through migration or personal links. The CER has fostered these personal links and built strong cultural exchanges between our countries, not the least of which—as you, Madam Deputy Speaker Bishop, would know—is the Bledisloe Cup, which brings our two countries together very strongly. The movement of professionals between the two countries, for example, has allowed for an endless stream of opportunities. One area that has taken advantage of this arrangement is the film industry. Films like Lord of the Rings and King Kong have had significant Australian participation. The CER has facilitated and assisted this development.

The New Zealand trade relationship is crucial to Australia. There is no doubting the importance of this. New Zealand is Australia’s third largest investment destination and our fifth largest trading partner. At the end of 2005, the total stock of Australian investment in New Zealand was a very significant $58.9 billion. Certainly that level of investment in our closest neighbour is important in our overall economic framework. New Zealand is also our third largest destination for exports and our eighth largest source of imports. In 2005-06, two-way trade in goods and services with New Zealand amounted to almost $20 billion.

This legislation contains initiatives to help continue building this relationship, building synergy in our respective regulatory frameworks and reducing red tape. I especially want to acknowledge the Parliamentary Secretary to the Treasurer, the member for Aston, whose area of responsibility includes the CER and whose work has moved its regulatory aspects forward. The first aspect of these initiatives is the mutual recognition of securities offerings. The current arrangements for offering securities beyond the issuer’s borders mean they must comply with two substantive fundraising regimes. This increases the cost of raising capital. This often leads to matters preventing an offer being extended to investors from the other country. As part of our greater coordination of business law, Australia has entered into a treaty with New Zealand to mutually recognise securities offerings. Clear, positive economic benefits will flow out of this reduction in duplication and compliance costs. Investors can also manage their risk more effectively through diversification of their investments.

This mutual recognition will also allow New Zealand entities to offer securities in Australia as long as they comply with New Zealand’s fundraising requirements. As a result of this bill, there are minimal additional requirements that we will now impose upon them under Australian law. And of course with mutual recognition Australian entities will be able to offer securities in New Zealand under the same terms. This bill is all about mutual recognition. I think the point that we have reached in the relationship between our two countries is that if something is acceptable in one country it should be acceptable in the other, and I certainly know the parliamentary secretary has recognised that. It makes doing business between the two countries a lot easier.

The regime is based on equivalent regulatory outcomes for equivalent disclosure to investors. However, as there are differences between New Zealand and Australian securities, investors must receive a warning statement in general terms with the offer document. There is certainly protection for investors as they will be aware of the nature of their investment. Other protection remains. Certain existing obligations of the Corporations Act will continue to apply—for example, the continuous disclosure requirements and the maintenance of a dispute resolution scheme for managed investment schemes.

The Australian Securities and Investments Commission and New Zealand regulators are responsible for enforcement of the regime. ASIC will have primary responsibility for taking action against foreign issuers who fail to comply with the requirements of the regime, while the relevant New Zealand regulator will have primary responsibility for supervising a cross-border offer. ASIC has stop-order powers for New Zealand offers in Australia—for example, if an offer document is misleading. ASIC can ban a person from future use of the regime, and there are criminal penalties for breach of regime requirements. So, effectively, investors will be getting greater access to a foreign market but adequate protection of their investment will remain. The regime will apply to the issue of securities—shares and debentures—and interests in managed investment schemes but not to financial advice. There will be fewer compliance costs and less duplication but strong regulation through the involvement of both ASIC and the New Zealand regulator in the enforcement of the scheme. This is crucial for investor confidence in any cross-border security offering.

The second initiative in this bill is the reduced filing requirements to be implemented—so the first part is mutual recognition and the second part is less filing, which we are all in favour of. This will enable closer integration of company laws, in particular managing cross-recognition of company registrations, whereby companies in Australia and New Zealand can do business in the other jurisdiction without complying with all of the filing requirements applicable to other foreign companies. Currently New Zealand companies wishing to operate in Australia must comply with the filing requirements applicable to foreign companies. This is a fairly arduous task that only acts as a further disincentive to cross-border investment. The new minimal requirements acknowledge the closeness of our relationship. New Zealand has enacted exemptions so that reduced filing requirements apply to Australian companies operating in New Zealand, and it is only fair that we should reciprocate this arrangement. This is part of the government’s broader long-term commitment to reducing red tape and avoiding unnecessary compliance costs. The national reform agenda developed as part of COAG is an example of this commitment as the government have moved to simplify corporate and financial services laws.

The ACCC information-sharing powers also form a major part of this legislation. It is crucial to promote sensible measures to help facilitate a functioning global market place and this includes information sharing by regulators. Under the current arrangements, the ACCC is prohibited from sharing information with any other regulators. This bill will change that premise by allowing the ACCC and other bodies to share certain limited information with other agencies. The amendments are closely modelled on similar information-sharing powers used by ASIC. They specify the limited circumstances in which information can be disclosed and the conditions that apply to that disclosure. There are strong privacy safeguards in the bill, and the amendments protect against any inappropriate disclosure of sensitive information. Protected information must not be disclosed unless permitted by a relevant law or in the course of duties as an ACCC official.

This bill is technical in nature. In a very practical fashion it is helping to reduce the red tape, duplication and compliance costs for business trying to operate across the Tasman. This is an important step in our growing economic relationship with our closest neighbour. I am a strong supporter of the government’s moves to synergise business laws and regulatory frameworks between the two countries. I commend the Parliamentary Secretary to the Treasurer for his efforts. It will encourage further investment—already at $60 billion—and will lead to a variety of interrelated consequences such as increased cultural exchange. I also hope to see increased business and trade opportunities stem from the introduction of this legislation. This bill is an important step forward in the development of the economic relationship between our two countries. I commend the bill to the House.

See this speech in context