Jane Prentice (Ryan, Liberal Party) Share this | Hansard source

The Abbott government is determined to continue their commitment to making the business of doing business easier and making the mechanics of governing more transparent. The changes proposed in the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 Bill once again demonstrate the lack of care taken by the Labor-Greens alliance while they were in charge. The member for Oxley said on Radio 612 ABC that the former Rudd-Gillard-Rudd governments had repealed thousands of regulations while they were in office. So it is difficult to understand how the coalition government is still able to find so many amendments that will have such great impact and relief on the compliance load of business in this country. So what exactly did Labor manage to rectify?

The first amendment in this bill redresses the current imbalance that exists when just 100 shareholders without a minimum number of shares can force the board of directors of a major corporation with thousands of shareholders to pay for a general meeting, costing thousands of dollars, to vote on resolutions that historically garner very little support at these meetings. Ultimately, these types of special meetings only hurt all shareholders, as the expense of calling these meetings impacts on the bottom line and results in a smaller dividend. I understand that small shareholders in some corporations may have issues with the governance of the corporation, but there are yearly meetings where these issues can be addressed. And, if an issue is serious enough, this amendment still allows a general meeting to be called if just five per cent of shareholders call for it. So, in this instance, a disgruntled shareholder can contact other shareholders and garner support for a meeting but at a higher level. This would usually mean the support of just one institutional investor. One hundred shareholders are still able to put resolutions on the agenda of general meetings and circulate materials at the expense of the company. This bill does not seek to strip away the ability of small shareholders to have their concerns heard; it just ensures that it is done in a way that does not harm the corporation financially and inconvenience other shareholders.

One of the major points of interest to shareholders, business groups and indeed the wider community is the issue of remuneration for directors and executives. The Corporations Act seeks to make this as transparent as possible and that remuneration reporting provides all relevant details to shareholders. The key word in the next amendment is relevant. This amendment removes the necessity for listed entities to detail the value of lapsed share options offered as part of key management remuneration. Options which were taken up must still be reported, but if the option lapsed it has no financial impact on the remuneration of the individual involved. In fact, they may have been slightly worse off if they had paid for the option but failed to conclude the transaction.

I can already hear the objections of those opposite saying we are trying to hide corporate pay from scrutiny, but this is just not true. Options that have been taken up, resulting in a share purchase at an option price, need to be reported as income for the sake of a pay package. If the option has lapsed, it had no financial impact on remuneration. In effect, this is now making it clearer to shareholders which executives and management individuals took the options and ignores those who did not, a much easier system to read.

The third amendment streamlines the auditor appointment process for companies limited by guarantee. A company limited by guarantee is usually, but not always, a not-for-profit organisation that has taken the step from an incorporated body. While they will still need to have their financial reports reviewed, there will be no requirement for them to hire and retain an auditor. For such companies that have no operating capital beyond that which the guarantors have put up, this move makes common sense. The cost saving can and will be quite significant for companies that are in the business of helping others. All other companies will be required to appoint and retain an auditor as per the current law. Only a very select subset of guaranteed companies will be exempt.

While speaking of streamlining processes, this bill seeks to address an anomaly in the operation of the Takeovers Panel under the ASIC Act. While the members of the panel are appointed from the private sector and hold senior roles in banks, law firms and significant corporations, the application of the ASIC Act is limited to Australia. This can be interpreted to mean that members of the panel have to be physically present in the country in order to carry out their duties. This is plainly absurd. When you have senior members of large corporations it is expected that they travel on occasions to other countries, especially with the expanding markets the Abbott government is opening up through our pursuit of trade agreements in our region. There is no good reason that a panel member must be situated physically within Australia for them to do their job. Technology has certainly broken down many of the previous barriers to effective communication that existed 13 years ago when this provision was declared.

And again, in chapter 6 of this bill we return to the theme of efficiency. The ASIC Act currently gives the Treasurer responsibility for setting the terms and conditions, including remuneration, for the chairman and members of the Financial Reporting Council, or FRC, the chairman of the Australian Accounting Standards Board and the chairman of the Auditing and Assurance Standards Board, with the FRC having input into the terms and conditions of AASB and AUASB. Rather than this approach, the government feels it is much better if the already established remuneration commission takes over the role of establishing the terms, conditions and remuneration of these entities. This establishes a level of transparency not seen before and lays to rest any argument that these are 'jobs for the boys'. By keeping these decisions at arm's length there can be no claims of impropriety or favouritism. And the process is far more transparent than the previous arrangements. Decisions will be made available and not hidden behind the veil of cabinet confidentiality.

The last point I wish to speak on is the clarification of the financial year for corporations. This may seem a bit curious—as we all know, the financial year runs from 1 July to 30 June. However, this clarification allows corporations the flexibility to shorten or lengthen the financial year by seven days in order for the close of the financial year to fall in line with corporation computer runs. It can be very costly to run reports out of sequence for business. Staff need to be paid extra, computer programs need to be altered and the potential for errors is high. By clarifying that they are able to do this, the government is supporting business by saying: 'We can respond to your needs. You can continue as you are, and we can work around your operation in this instance'.

This bill is yet another example of the commitment the coalition government has to cleaning up the mess left by the Labor-Greens alliance. Yes, they left the budget in a shambles and locked future governments into reckless spending past their term. But that is just the tip of the iceberg when it comes to the reckless indifference they paid to actually governing. If they had spent as much time attempting to govern as they did on the machinations of who would be the next puppet Prime Minister, then we would not have to keep introducing amendment and repeal bills to the House

And, yes, there is more to come, because Australia needs an industrious government. Following the indolence of the Rudd and Gillard eras, we need to create stronger economic growth, which in turn means profitable businesses and in turn jobs for Australians.

I commend the bill to the House.

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