Steve Georganas (Adelaide, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee's report, incorporating a minority report, entitled Litigation funding and the regulation of the class action industry.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—This report is a clear example of the important work that we do in parliament and the important work that committees do because it reflects the very serious debates and discussions that occur in our committees. This is evident in the minority report of the committee members, which has been tabled as an attachment to the committee's report. It reflects the reservations expressed by the Labor committee members regarding a number of the committee's key recommendations. Over the last three years, the current government's approach to policy-making in relation to class actions and litigation funding has been fairly contradictory and conflicting, to say the very least. An example of this is from December 2017, when the current government commissioned the Australian Law Reform Commission to conduct a comprehensive review of class action proceedings and third-party litigation funders.

After the commission completed its review and made 24 recommendations for reform, the government did nothing, and for almost 18 months the Morrison government uttered barely a word about class actions and litigation funding. Then, in the middle of a global health and economic crisis, the Attorney-General established this supposedly extremely urgent inquiry into litigation funding and the regulation of the class action industry. But in May last year, before this committee had even received its first submission or held its first public hearing, the Treasurer pre-empted the outcome of the government's own inquiry. It did so by announcing two primary requirements: (1) the litigation funders would be required to hold an Australian financial services licence, and (2) they would have to comply with the managed investment scheme regime under the Corporations Act 2001.

I remind the House that these two proposals had already been considered and had already been rejected by the Law Reform Commission, the Department of the Treasury and the Australian Securities and Investments Commission, among others. The opposition members on the committee therefore question why the committee is tabling a report that largely repeats those precise recommendations, and that is all in our minority report. My colleagues and I sought to explain in that report just how irrational the Treasurer's new regulations are. But you don't have to take just the words of the opposition members on this committee. ASIC, for example, the entity tasked with administering the Treasurer's new regulations, has had to spend $60,000 of taxpayers' money to get legal advice about what the regulations even mean. If the regulator doesn't understand the regulations, then what hope do the organisations subject to those regulations have, we ask. Perhaps even more incredibly, ASIC has admitted that it is impossible for some class actions to comply with these rules. ASIC said this, not committee members. It's true that ASIC has said that it won't act against class actions that do not comply with that requirement, but at the same time it's acknowledged that it is powerless to stop other Commonwealth agencies or even private parties from taking legal action against a class action for breaching these obligations. In other words, many Australians will now have to break the law in order to exercise their basic legal rights. So I'd urge those listening and those who are interested to read the minority report by the Labor members, which sets out in detail those objections.

But, despite those objections, there are also areas of agreement. There are many good things in the report as well. Labor members agreed that the Federal Court could and should make better and more regular use of independent fee assessors and contradictors to represent the interests of plaintiffs in class actions. We also agreed that there should be greater transparency around the process of approving settlements, and better processes around managing or prohibiting conflicts of interest.

No-one is arguing that the current system is perfect. But we, in Labor, believe that there is a lot this parliament could do to ensure the best possible returns for plaintiffs in class actions while also improving the access to justice for ordinary Australians. This is a very important matter and we would welcome a bipartisan approach from the other side. But, based on this government's track record, I'm not sure how likely that is.

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