Mark Dreyfus (Isaacs, Australian Labor Party, Shadow Attorney General) Share this | Hansard source

Although we have reservations, Labor supports schedule 1 of the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. Others have commented on those amendments. In my remarks today, I will focus on schedule 2 of the bill, which Labor does not support.

On 25 May 2020, the Treasurer announced temporary changes to the continuous disclosure provisions in the Corporations Act. Before that date, the continuous disclosure regime introduced by the Howard government had required companies to disclose any information that was not generally available to shareholders and that a reasonable person would expect to have a material effect on the price or value of a company's shares. When a listed company or a director failed to fulfil that obligation and shareholders suffered as a result of that failure, shareholders could take action, and they didn't have to prove that the company or the company's directors had knowledge or were reckless or negligent. As the Australian Shareholders Association put it in a media release last week:

Previously if there was any failure to keep the market informed under the current 'Continuous Disclosure' rule, it was a simple black and white situation, don't tell shareholders something material and the Company and its Directors were liable. This was great for shareholders because they do not have insider or special interest knowledge and all they know is what they are told and what they read.

In May 2020, the Treasurer used an emergency COVID-19 power—or, more accurately, the Treasurer misused an emergency COVID-19 power—to water down John Howard's continuous disclosure obligations. As a result of those temporary changes, which continue to operate as I speak, shareholders who suffer a loss as a result of listed companies or company directors withholding information from them now have to prove that a company or a company director had knowledge of, or was reckless or negligent in respect of, whether the information they did not disclose to shareholders would have had a material effect on the price or value of the company's shares.

In less legalistic terms, the Treasurer's temporary changes make it easier for company directors to withhold important information from shareholders and harder for shareholders to take action against dodgy directors. Those are the changes that schedule 2 of this bill would turn into a permanent feature of Australian Corporations Law. As the Australian Shareholders Association said last week:

So the new instruction to management from boards could be, if you want to keep some information to yourself or exaggerate a bit just make sure you don't tell me so no one can sue me.

Let's be very clear about what we're talking about here. Australia's continuous disclosure obligations require companies to keep markets fully informed of anything that could materially affect their share price. These laws protect shareholders, promote market integrity and, by extension, make it easier for Australian companies to raise capital. As ASIC has told the Treasurer, the continuous disclosure regime 'is a fundamental tenet of our markets and is particularly important during times of market uncertainty and volatility'. It is not something to be messed around with or treated like an ideological plaything, but that is how the Morrison government is treating it, and it's a direct attack on the rights and interests of every shareholder in Australia. From mum-and-dad investors to self-funded retirees to large institutional investors, every single Australian shareholder should be concerned about these changes.

Why is the Morrison government doing this? The main reason the Morrison government has offered for the changes in schedule 2 is the supposed threat of 'opportunistic class actions' by company shareholders. The Morrison government doesn't explain what it means by 'opportunistic class actions'. My guess is that the government thinks that all class actions, whether by shareholders or any other aggrieved group of Australians, are opportunistic. How dare ordinary Australians who are harmed by powerful interests vindicate their legal rights! That's what the Morrison government says. The Morrison government, of course, has direct experience of class actions. Whether it's property owners in Townsville, Darwin, Perth, Richmond and many other places across Australia banding together to sue the government because the Department of Defence allegedly allowed toxic chemicals known at PFAS to contaminate local environments, or the victims of the Prime Minister's illegal robodebt scheme launching a class action to vindicate their rights, the Morrison government hates the idea of ordinary Australians standing up for themselves.

But let's put aside the debate about the merits or demerits of class actions, because, when it comes to the proposed changes to continuous disclosure laws, that is a side issue at best. Let's instead put the Morrison government's pathological obsession with class actions, and shareholder class actions in particular, into context. According to the large commercial law firm Allens, in 2019 there were 10 shareholder class actions filed in Australia—not 10,000 but 10. In fairness, and so I can't be accused of cherrypicking statistics, I note that in 2018 there were about 20 shareholder class actions filed in Australia, in 2017 there were about 15 and in 2016 there were fewer than five. Those figures also come from Allens. The point is that, on any measure, these are tiny numbers, especially when one considers the many tens of thousands of cases filed in Australian courts each year.

With this bill, the Liberals are trying to water down the continuous disclosure regime introduced by John Howard, a regime that has served Australia, and particularly Australian shareholders, very well for decades. With this bill, the Liberals, under Scott Morrison, are trying to make it easier for company directors and officers to get away with withholding information and with providing misleading information to shareholders.

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