Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

The Commonwealth Authorities and Companies Amendment Bill 2008 aims to improve accountability and transparency arrangements for Commonwealth authorities and Commonwealth companies, and align the Commonwealth Authorities and Companies Act 1997 with equivalent provisions in the Corporations Act 2001. These changes are based on experience from 10 years of operation of the act, which was introduced by the coalition government in 1996 as part of a package of four bills and associated measures designed to modernise controls on Commonwealth finances and over businesses owned or operated by the Commonwealth. The act brought a greater degree of uniformity and clarity to financial reporting standards applying to Commonwealth authorities and established standards of conduct for those engaged in the management of those entities. These amendments build on the act and are aimed at improving governance and accountability arrangements for bodies within the Australian government.

The coalition supports any move to improve governance and accountability; in fact, the coalition has a proven track record when it comes to improving governance, accountability and transparency across a range of areas. We introduced accrual accounting to provide details of the full cost of service delivery. For the first time we published a balance sheet for the general government sector and the whole of the public sector. When Labor were last in government they had no idea and certainly we had no idea of what the value of the government’s assets were or key liabilities like the unfunded superannuation liability. We introduced for the first time consolidated whole-of-government financial reports audited by the Auditor-General and we introduced the outputs-outcomes framework to place the focus on what was actually being delivered for the money spent.

We introduced legislation to bring 2,800 Aboriginal and Torres Strait Islander corporations up to date with modern corporate governance and accountability standards. In 2003 it was the coalition that established the Defence Materiel Organisation, the DMO, as a prescribed agency, giving Australia’s largest project management organisation greater responsibility and accountability in providing better procurement to ensure equipment was delivered on time and on budget. The coalition paid attention to making migration settlement programs outcome orientated, accountable and focused on delivering services that ensured migrants, refugees and humanitarian entrants become independent, active participants in Australian society as quickly as possible. Under Labor last time, when they were last in government, settlement grants were distributed on political grounds rather than community need, while poor management and lack of accountability jeopardised settlement program delivery.

Australia is a model in relation to transparency and accountability to countries around the world. The OECD Economic Survey of Australia released in February 2005 said:

In the last decade of the 20th century, Australia became a model for other OECD countries in two respects: first, the tenacity and thoroughness with which deep structural reforms were proposed, discussed, legislated, implemented and followed-up in virtually all markets, creating a deep-seated “competition culture”; and second, the adoption of fiscal and monetary frameworks that emphasised transparency and accountability and established stability-oriented macro policies as a constant largely protected from political debate. Together, these structural and macro policy anchors conferred an enviable degree of resilience and flexibility on the Australian economy. The combination resulted in a prolonged period of good economic performance that shrugged off crises in its main trading partners as well as a devastating drought at home. The short-term outlook is for continuing strong growth of productivity and output, low inflation and budget surpluses accompanied by tax cuts.

The point that needs to be made here is that, unlike the government, the coalition stands for: government remaining transparent and accountable for its decisions; minimising government waste and inefficiency, so the government’s investment in services like health, education, defence, the environment and transport is weighted towards services on the ground rather than administration; and disciplined financial management, so the government lives within its means, without imposing the burden of higher taxes or placing pressure on interest rates with deficits and government debt.

On that point, it is a little bit rich for the Labor Party at the moment to blame inflation on the former coalition government and claim it now needs to cut government spending. The coalition should be remembered as having a proud record in economic and particularly financial management. We inherited a $10 billion deficit when we came to government, which we converted into around $10 billion surpluses. We inherited $96 billion of debt when we came into government in 1996, which we completely eliminated. We inherited a ballooning unfunded superannuation liability, which we addressed by creating the Future Fund, a fund which Labor has now already started to flag as one that it will raid into the future.

The Labor Party are in no position at all to question the coalition on our financial management. It is absurd for Labor now to blame the coalition for inflationary pressures when Mr Swan in opposition actually opposed virtually all our proposals to help contain inflation, including eliminating debt, producing surpluses and liberalising workplace relations. Labor criticised our surpluses as being too large and always demanded extra spending in almost every area of government responsibility. And now Labor are claiming to be economic conservatives.

Labor were paralysed in opposition for 11½ years because they ruined the economy when they were last in power. Families and people in business, small and large, could not forget the interest rates—in some cases over 20 per cent—on overdrafts and bill facilities; unemployment hit 10.9 per cent and the economy was faltering. Quite rightly, the Australian people would not trust Labor with the economy again for a period of almost 12 years; that was until November 24 last year. By that time the political minds of the ALP, including the now Treasurer, had decided they would have to convince, to fool, the Australian people they were economic conservatives just like the coalition. To regain office, they would have to pretend there was not a sliver of difference between the capacity of the coalition to manage the economy and the ability of Wayne Swan and Kevin Rudd to do it. Essentially they needed to be able to argue to the Australian people that they could be trusted to manage a $1.1 trillion economy. Politically—and this is the important point—they could not let the Australian people see their economic incompetence again, or it would be electoral suicide.

When Australians ask themselves why our economic history is being rewritten at the moment by Kevin Rudd, Lindsay Tanner, Wayne Swan and others—

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

Order! I ask that the member refer to other members by their titles.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

With pleasure, Mr Deputy Speaker. With all those members and more on the Labor side, the reality is that they are talking down the Australian economy for political purposes. They are talking up the impact of inflation. They are talking up the prospect of market activity in terms of where they think rates will be. The Australian people should question the motives of people like the Treasurer and ask why he feels compelled at the moment to talk down the Australian economy, to shatter business and consumer confidence, in a fragile environment where internationally there are ramifications that will flow to our economy over the coming months and years.

Labor aim to deliver a budget surplus of at least 1½ per cent of GDP in 2008-09. They claim that this will require discipline and an approach to spending which is hardline, particularly in relation to savings. But the truth of the matter is that 1½ per cent of GDP is not exceptional in the present circumstances, when the coalition left a strong, growing economy with low unemployment and zero net debt. When we came into government, $8 billion a year of government revenues flowed straight back out the door to service the interest bill that went with that $96 billion of debt. It is an absurdity for Labor to claim at the moment, with the fundamental strengths of the Australian economy, that they will not have the capacity to reach a surplus well beyond the 1½ per cent of GDP that is forecast. Labor say that future budget surpluses cannot be given back to taxpayers as they are inflationary but at the same time claim that the $31 billion in tax cuts promised in the election are not inflationary.

The point needs to be made that one cannot have it both ways. Either tax cuts put pressure on inflation or they do not. The coalition turned around a budget deficit of over $10 billion in 1995-96 to deliver 10 surpluses in 12 budgets. In their last five budgets when they were last in government Labor produced cumulative deficits totalling $69 billion. Between 1990-91 and 1995-96, net government debt under Labor rose from $16.9 billion to a staggering $95.8 billion. As recently as 2004-05, if you want a better understanding of how Labor manages the economy, the state budgets were collectively in fiscal surplus by almost $4 billion. This year, the budgets of seven of the eight states and territories are forecast to be in fiscal deficit to the tune of nearly $6 billion. That represents a deterioration of around $10 billion in just three years, at the same time that the coalition repaid the $96 billion of debt which Labor had passed on to future generations.

At the moment the Labor Party, particularly the Minister for Finance and Deregulation, is in a mode of running around suggesting that the so-called ‘razor gang’, which is nothing more than a political stunt, will guide the budget back into increased surplus and therefore bring downward pressure on interest rates. The reality is that there has been no transparency on the part of this government, and the most vulnerable have been given no guarantee that they will continue to receive the support they need. The minister for finance is saying that he is going to go out and solve government spending issues by slashing $15 million worth of Public Service travel and that somehow that is going to rectify the economic position—if it needs rectifying. That really goes to what a political stunt mode the minister and the Treasurer are in at the moment.

I think that, at the moment, the Australian people—and, in particular, economists—are seeing through the pretty shallow political path that these people are heading down. There is no substance to the argument they are putting forward. This is a $1.1 trillion economy and the finance minister of this country is going out and suggesting that if public servants’ travel expenses were cut by $15 million, out of a $1,100 billion budget, that would somehow bring downward pressure on interest rates—at the same time that state governments are running up debts at record levels right round the country.

This is an issue that more political journalists need to investigate, because this really is a political stunt which, over the first few months of the Rudd government, has gone terribly, terribly wrong. People are paying for this pain at the moment, given this talking down of consumer sentiment and consumer and business confidence. It really has long-term ramifications. I think that at the moment this is way beyond the grasp of a Treasurer who is clearly completely out of his depth. This is a Treasurer who, at this present time, has no capacity to deal with the complexities that face this government in terms of not just the domestic pressures but also the international pressures on our economy.

The point needs to be made that, over the course of 12 years of economic management under the Howard government in this country, we were able to deal with issues such as the US going into recession. We were able to deal with a significant drought. We were able to deal with the realities that faced our country in an international sense. When economies right through Asia and in parts of Europe were suffering significant downturns, we were able to deal with all of those pressures, including inflationary pressures, right through our period of government.

The reality is that it took a long time for the Treasurer to switch from opposition mode to government mode. He made the transition very difficult for himself by going out and for political reasons talking down the economy so that, if in the future interest rates did go up, Labor would not be saddled with the issue and somehow the origin of inflationary pressures would lie with the former government. That is the political argument that the government have tried to make. It is a false argument that went to the lack of credibility of this Treasurer. It is why when you talk to economists and people in financial sectors right around the country they laugh at the performance thus far of Treasurer Swan. It really has been a politically based performance that has certainly not focused on the economy in the responsible way this person should.

Before the election, Labor pledged to increase financial assistance to older Australians, people with disabilities and carers. But we have heard in recent days that the razor gang wants to cut funding to the most disadvantaged. Labor claimed $643 million in savings. That was, again, a political stunt. Many of the programs are not being cut at all; they are just being moved within the balance sheets and are a mere drop in the ocean relative to the size of the economy and in terms of having a downward pressure on inflation. The true test of the upcoming budget will be whether or not the Labor Party has cost-cutting measures which run into the billions of dollars for single programs. The payment to carers totals about $1.7 billion. If the Labor Party is to commit to that sort of expenditure over the forward estimates over four years, that is expenditure in excess of $6 billion that the Labor Party has now walked away from, and no doubt its ERC process will be looking at ways by which it can slice government expenditure of that order.

In my view, it is incumbent upon the Labor Party to come out and say ahead of the budget which of the sacred cows, if you like, they are going to slash. Are they going to slash childcare expenditure, which enjoyed a significant increase under the Howard government? Are they going to slash expenditure on health, which was an area where significant expenditure existed under the Howard government? Are they going to slash expenditure on defence, which again was an area which received significant support under the Howard government? Are they going to slash support to families through the family tax benefit part A or part B? I say to the member for Oxley: which of those policies would your constituents support slashing? Would they support abolition of the government’s support of the childcare tax rebate or the childcare benefit? With Amberley close to your electorate, would you support the Rudd government slashing the funding to defence? These are the sorts of areas that would need to be cut significantly by the Rudd government if they are to make significant inroads into the tens of billions of dollars that the Treasurer seems to be alluding to.

The Minister for Finance and Deregulation has been talking about the necessity of cutting billions of dollars worth of Commonwealth expenditure. Unless he cuts into those sorts of programs, this will have once again been only political rhetoric and will have made a farce of some of the statements that the Minister for Finance and Deregulation and the Treasurer have made in relation to this debate so far. The reality for people such as the member for Oxley, who has been making false promises to his electorate for so many years, is that some programs of that nature will have to be cut if the Labor Party are to deliver on this promise of slashing government spending, because those are the main areas of expenditure. I see no evidence from the Labor Party as to how they are going to cut expenditure in those areas.

Labor may talk about accountability, but this is not something that it practises in the area of financial management. Labor’s policy of giving state governments free rein over how they spend money from specific purpose payments means that federal Labor is effectively writing blank cheques for state Labor, despite their record of mismanagement and shocking service delivery. They have had terrible performance, particularly in Queensland.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Rubbish!

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

The member for Oxley jumps to the defence of people like Wayne Goss, Peter Beattie and Anna Bligh—

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Great premiers.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

people who have squandered economic opportunity like no others, except perhaps those in New South Wales, Victoria, Tasmania, Western Australia, the ACT and the Northern Territory, and many local government authorities as well where Labor governs. The reality is that we need to put on the record that Labor when in government are in an economic sense nothing more than B-graders. When you look at somebody like the current Treasurer, he is laughed at not just by the banks but by the economists and by the financial markets. Now he is being laughed at by Australian families and by small business. For some of them, that is now turning into stark horror and terror, because they really are worried about where this Australian economy is headed under Wayne Swan. The first three months have certainly been a bad sign of where Labor is intending to take us.

In conclusion, the coalition supports these amendments aimed at improving the governance and accountability arrangements of bodies within the Australian government. However, history shows us that Labor has at both a federal and a state level continually avoided appropriate levels of accountability and transparency. The practice appears to be continuing under Rudd Labor. This government must immediately stop the hypocrisy and start implementing its supposed program for accountability and transparency. Labor must stop the political ranting and raving and provide some underscoring to the confidence that was once there for businesses in particular so that they can continue to make investment decisions and decisions about employing staff and we can see continued growth in the Australian economy. Kevin Rudd and Wayne Swan have at the moment no idea as to where the Australian economy is headed over the next 12 months. If we see in this country a slowing of growth similar to that which we are now seeing in the United States, the current Treasurer will have no capacity and no plan to deal with that. At the moment, he is clubbing the Australian economy to a slow death. It is a political path which is dangerous, not just for Australian business but also for Australian consumers. In conclusion, the opposition supports the bill for the reasons that I have outlined.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Commonwealth Authorities and Companies Amendment Bill 2008. One of my favourite TV shows was Yes, Minister, brilliantly written by Jonathon Lynn and Antony Jay. It tells the story of the often hapless yet crafty Jim Hacker, the minister for the fictitious Department of Administrative Affairs in the United Kingdom government in the 1980s, and the smooth-talking head of the department, Sir Humphrey Appleby. There are many famous episodes of Yes, Minister but perhaps my favourite is called A question of loyalty. The minister had to front a select committee looking into the affairs of the department. He is fully briefed—so he thinks—and he goes to the committee with a scrum of public servants. His nemesis, opposition MP Betty Oldham, the member for Derbyshire East and a member of the committee, had leaked to her a new book by a retired civil servant detailing government waste in the department. This causes the minister much embarrassment and frustration at the meeting. When it is Sir Humphrey’s turn to front the committee, he gives a vintage performance. I mention this because it highlights why the Rudd government’s amendment is so timely. I would just like to repeat a passage which humorously illustrates the point. Mrs Betty Oldham says:

Isn’t this a fantastic waste of taxpayer’s money? Do you agree the money was wasted?

Sir Humphrey Appleby replies:

It is not for me to comment on government policy. You must ask the minister.

Betty Oldham says:

Look, Sir Humphrey, whatever we ask the Minister, he says is an administrative question for you, and whatever we ask you, you say is a policy question for the Minister. How do you suggest we find out what’s going on?

Sir Humphrey then replies in his own way:

Yes, I do think there is a real dilemma here, in that while we have government policy to regard policy as the policy of Ministers and administration has the responsibility of the officials, questions of administrative policy can cause confusion between the administration of policy and the policy of administration, especially when responsibility for the administration of the policy of administration conflicts or overlaps with the responsibility for the policy of administration of policy …

Mrs Betty Oldham replies:

That is a lot of meaningless drivel, isn’t it, Sir Humphrey?

Sir Humphrey replies:

It is not for me to comment on government policy. You must ask the minister.

I speak in support of this bill because it talks about the policy of administration and the administration of policy. Its purpose is to amend the legislation that regulates the financial affairs of Commonwealth authorities and companies under section 7 of the relevant act. Under section 7, a Commonwealth authority is a body holding money on its own account as a body corporate incorporated for a public purpose by an act of parliament or regulation. Under section 34 of the act, a Commonwealth company remains a Corporations Act company in which the Commonwealth has a controlling interest. It is these definitions that are being repealed under the new bill. The test that determines whether the Commonwealth controls a company has been improved under the new bill; hence, we have a better definition of what Commonwealth companies are. The existing section 4 states that a Commonwealth company does not include a company in which the Commonwealth has a controlling interest through one or more of the interposed Commonwealth authorities or Commonwealth companies. This new definition is a vast improvement because it provides greater certainty as to when the Commonwealth controls a company. It controls it if, and only if, it controls the composition of the company’s board—that is, it can appoint or remove the majority of its directors—it controls greater than 50 per cent of the total votes at a general meeting; or it controls greater than 50 per cent of the issued share capital.

Why does this esoteric legal definition matter at all? It matters because legislation that governs these issues talks about reporting and accountability of Commonwealth governments and it talks about the regulation of Commonwealth companies and Commonwealth authorities. Commonwealth companies have reporting obligations beyond mere companies operating under the Corporations Law. We are talking about taxpayers’ funds. We are talking about the need for informed transparency and accountability. Hitherto, there has been uncertainty and vagueness as to just what is a Commonwealth company and what is a Commonwealth authority. Henceforth, amendments will be put in plain English. The bill says quite clearly that a person’s appointment as a director of a company follows necessarily from the person being an agency head or a statutory office holder. Thereby, that person is accountable. That is important. We expect as much of company directors.

This leads to another important reform in the bill. It aligns the act with the Corporations Law for offences, penalties and terminology. This is particularly so relating to the failure to prepare financial statements or have them properly audited. A further important reform is to section 27F(1) of the act. A director of a Commonwealth authority who has a material personal interest in a matter that relates to the affairs of the authority currently needs only to give notice to the other directors. Under the bill, that director must not be present when the matter is being considered at a meeting or vote on the matter. This is an admirable reform in the area of law relating to conflict of duty and interest, and it surprises me that it was not included in the first place when the original legislation was promulgated in 1997. Further, the new bill clarifies the use of credit cards by Commonwealth authorities and introduces penalties for their misuse. The existing act is silent on the issue. We currently live in a world of vagueness. The bill sets out that cash, goods and services can be obtained by a Commonwealth authority by use of a credit card or a credit voucher. Regulations pursuant to the act will specify who is authorised to use that credit card or voucher on behalf of the authority and the circumstances in which it may be used, where it may be kept and the maximum amount that may be borrowed. There are tough penalties of up to seven years in prison for those who so misuse. The bill also simplifies the application of the general policies of the Commonwealth government, making those policies more efficient and transparent.

Section 28 and section 43 will both be replaced. This is important: under those two sections a minister may notify the directors of a Commonwealth authority in writing of general policies of the Commonwealth government. The responsible minister must consult the directors before notifying them of government policies. This is an extraordinary reversal of what I think the relationship should be between elected government officials and the public service. This section in its original form could easily have been drafted by Sir Humphrey Appleby out of Yes, Minister. He would have loved the section, because poor old Jim Hacker, the minister, was always required to consult with Sir Humphrey before even the general policies of the fictitious Department of Administrative Affairs were applied.

Under the existing act, directors must ensure as far as practicable that policies are carried out in relation to subsidiaries of the authority. It is hard to see how they can do it. It is full of vagueness and obscurity, and I am certain Sir Humphrey could have drafted it even better than that. Even then, under this existing legislation, the minister could in writing exempt the directors of a Commonwealth authority from carrying out the general policies of the Commonwealth government.

Section 43 of the act applies the same appalling drafting and bad public policy to Commonwealth companies. Really, the previous Howard government should be ashamed of itself for this particular piece of legislation in those sections. I am pleased that the new sections in relation to Commonwealth authorities and Commonwealth companies make it plain who is in charge: the government is here to set the policy, and the public servants are here to execute it. The new provisions state explicitly that directors of Commonwealth authorities and Commonwealth companies must ensure those entities comply with the general policy orders to the extent to which those apply. Further, directors may even exclude their requirements to comply with that order in relation to the ABC, the SBS, the ANU and the AIDC—and rightly so.

The new bill is important in this regard—it has consequences that the directors of a Commonwealth authority or Commonwealth company, and not the Auditor-General, must provide financial statements and audited reports to the responsible minister. Also, the new bill requires all Commonwealth companies to provide a base level of annual reporting to the responsible minister, whose duty it is to table the report in parliament.

Since the late 1990s, we have seen a toughening of duties and obligations for company directors under the Corporations Law. When the Commonwealth Authorities and Companies Act was enacted in 1970, it was modelled on the Corporations Law which was then enacted. In those days, officers’ duties were far less onerous and the corporate veil of protection was stronger than it is today. I welcome the strict liability offences under section 27F(1A), a new provision which states that strict liability applies to the circumstance where the director of a Commonwealth authority has a material personal interest in a matter that relates to the affairs of that authority—and so it should. They should be found strictly liable.

I applaud the government in respect of the notification provision for general policies. General policies apply to Commonwealth companies, and Commonwealth authorities will now be identifiable. Those general policies will be published on a federal registry of legislative instruments pursuant to the Legislative Instruments Act, and the Australian public will then be better informed accordingly. These provisions show that the Rudd Labor government is serious about openness, good corporate governance and accountability. The amendments in the bill bring the bill and the legislation into line with the Corporations Law.

The act when it was first enacted detailed rules about reporting and accountability, but we have had 10 years of corporate experience since that time. Much has changed in our society’s attitude towards corporations concerning corporate governance and accountability, and we expect more of companies and directors in the private sector. We expect them to follow the same rigorous rules that we expect also of Commonwealth companies and Commonwealth authorities and their directors.

I listened with interest to the previous speaker, the member for Dickson, who seemed to be in denial when it came to so much of the previous Howard government’s performance—accepting all of the credit but taking none of the responsibility. He was then both politician and prophet, prophesying that the Rudd Labor government would excise and not commit itself to the commitments it made in the last election. I have news for him: we will carry out all the commitments that we made in Dickson as well as in Blair.

The Rudd Labor government is fair dinkum when it comes to promoting the public interest. It is fair dinkum about not giving legislative licence to the Public Service to frustrate the policies of the elected government of this nation. Genuine reform to improve transparency, efficiency controls and practice is needed. The Rudd Labor government is prepared to do it. This bill is yet another step in the government’s reformist agenda to restore trust and integrity in government. This government is determined to build a modern forward looking and thinking Australia. It is determined to improve Public Service efficiency and get value for taxpayers’ dollars.

The government is determined to face the challenge of economic management and accountability. The Rudd Labor government will ensure those who run Commonwealth companies and Commonwealth authorities report properly, act with probity and engage in best practice. Australia needs an impartial, competent public service committed to securing the public interest. The Rudd Labor government is determined to see it happen and any Sir Humphreys in the Public Service should beware.

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

I rise also in support of the Commonwealth Authorities and Companies Amendment Bill 2008, which is a bill to amend an important piece of Commonwealth legislation, the Commonwealth Authorities and Companies Act 1997. This act is an act that governs reporting and management requirements that are imposed on a range of statutory authorities and a number of Commonwealth companies in which the Commonwealth has a controlling interest. By way of illustration, among the statutory authorities are important bodies such as the Australian Fisheries Management Authority, the Australian Government Solicitor, the Australian Broadcasting Corporation, the Australian Industry Development Corporation, the land councils in the Northern Territory and a range of other bodies—the Australian War Memorial too is an authority that is governed as to its reporting and management requirements by the Commonwealth Authorities and Companies Act.

Equally there is a range of companies in which the Commonwealth has a controlling interest that are governed by this act. By way of illustration, the National Australia Day Council, Film Australia Ltd, the Telstra Sale Company Ltd and the Australian Rail Track Corporation Ltd give the Committee some idea of the nature of the corporations which are governed by this legislation.

This amending bill picks up a range of requirements that are long overdue. It simplifies the process for applying general policies of the Australian government to make it more efficient and transparent through the introduction of a procedure known as general policy orders, which will replace the current process that is provided for under sections 28 and 43 of the Commonwealth Authorities and Companies Act. It will require all Commonwealth companies to provide a base level of annual reporting to their responsible minister, who then tables the report in parliament. It will better align—this is one of the more important features of the legislation—the Commonwealth Authorities and Companies Act with the Corporations Act, particularly in relation to offences and in relation to penalties and terminology, so as to get a meshing between the Corporations Act 2001 and the Commonwealth Authorities and Companies Act.

Another purpose of this legislation is to clarify the use of credit cards by Commonwealth authorities and to introduce penalties for the misuse of those credit cards. It makes, I suppose, what could be described as a ‘machinery change’ in improving the test to determine whether the Commonwealth controls a company and thus better defines what a Commonwealth company is. It provides that directors of a Commonwealth authority or a Commonwealth company must provide financial statements and audit reports of subsidiaries to their responsible minister. It makes some quite important clarifications about compliance with statutory and other duties by amending the protection of directors and public servants in the Commonwealth Authorities and Companies Act to ensure there is protection given to the persons who are intended to be covered.

All in all, this set of reforms is directed at achieving consistency, transparency, accountability and the reduction of red tape—all of which aims are touchstones for the Rudd Labor government, all of which you will hear much more about in the years to come. I will start first with the general policy orders change which is proposed by this bill. That is a measure which is very directly aimed at improving transparency. The Rudd government is committed to transparency. This change will enable the making of general policy orders which will be publicly available. They will be listed on the Federal Register of Legislative Instruments and be more readily identifiable therefore to parliament, to the public and of course to Commonwealth authorities and wholly Commonwealth owned companies.

It will not change the way in which a general policy is developed. What it will change is the way in which such policies will be notified in a transparent way to be issued by the Minister for Finance and Deregulation through a general policy order and listed on the Federal Register of Legislative Instruments. It will also improve consistency of the application of policy and reduce red tape, again those being themes of the Rudd Labor government.

There are some important changes proposed by this bill to reporting requirements to be imposed on Commonwealth authorities and Commonwealth companies. Again, the aim of these changes is to improve consistency. The bill does so by ensuring there will be consistent reporting requirements imposed by treating henceforth all of the Commonwealth companies as public companies, notwithstanding that some of them are technically proprietary companies and have been, since changes were made to the Corporations Act, theoretically exempt from the requirement to prepare annual reports. That is not seen as appropriate. It is seen as appropriate that all Commonwealth companies should report in a consistent way. This bill will achieve consistency in that area.

There will also be increases in reporting by wholly owned Commonwealth companies that are outlined in the bill. There are important alignments to be made by this bill with present provisions of the Corporations Act. I digress to make the comment that, while it is desirable that there be alignment of the provisions that apply to Commonwealth authorities and Commonwealth companies with the provisions of the Corporations Act, the Corporations Act itself is probably sadly in need of some reform. A former Chief Justice, Sir Anthony Mason, was moved to describe the Corporations Law—that is, the predecessor law of the Corporations Act 2001—in 1992, some 15 years ago, in these terms:

Oscar Wilde would have regarded our modern Corporations Law not only as uneatable, but also indigestible and incomprehensible.

Nothing much has changed in the 15 years since Sir Anthony Mason spoke. I regret to say that the Corporations Act has, if anything, only got more indigestible and incomprehensible since.

It is to be hoped that in the short term rather than in the long term we will be able to pay attention to the whole of the provisions of the Corporations Act in order to try to eliminate some of the immense complexity of that piece of legislation. I speak partly as a former practitioner, as someone who has had to work with the provisions of the Corporations Act 2001 and its predecessor legislation. It is very much a project that I hope the Rudd government will be able to pick up. While it is desirable that there be alignment, for present purposes, of the requirements that apply to officers of Commonwealth authorities and Commonwealth companies with the reporting requirements that apply to companies generally under the Corporations Act, it is a matter of regret that in one sense we are imposing the same level of complexity that one can find in the Corporations Act on those Commonwealth authorities and Commonwealth companies.

The particular alignments—which I do say are appropriate, notwithstanding the complexity of the provisions of the Corporations Act that they are being brought into line with—deal with, first of all, including a definition of ‘senior manager’ to make the bill consistent with the provisions of the Corporations Act. As the member for Blair explained, we are going to see increased consistency with Corporations Act offences and penalties so as to bring the provisions that apply to Commonwealth authorities and Commonwealth companies into line with the ‘officers’ duties’ provisions that are found in the Corporations Act. There are also going to be matching provisions to impose a criminal penalty where there is a contravention of a reporting rule, similar to the Corporations Act. There are going to be some matching provisions to bring accounting records requirements into line with the Corporations Act. Importantly, again in order to achieve consistency with the Corporations Act, there are going to be provisions in relation to a failure to disclose material personal interests.

Also relating to alignment with the Corporations Act there is presently a very important provision in section 27N of the Commonwealth Authorities and Companies Act which prohibits a Commonwealth authority from insuring its officers against wilful breach of duty, misuse of position or misuse of information. That gives effect to a very important principle relating to corporations, which is that it is wholly inappropriate and improper for a corporation to seek to insure its officers against wilful breaches of duty and wilful misuse of position. This bill will introduce a strict liability element in the same fashion as there is a strict liability element applied to this particular offence in the matching provision in the present corporations legislation.

I will mention one other alignment where consistency is being achieved with the Corporations Act provisions, and that is the provisions of the Commonwealth Authorities and Companies Act that—

A division having been called in the House of Representatives—

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

It being 6.40 pm, the debate is interrupted in accordance with standing order 192. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The member will have leave to continue speaking when the debate is resumed on a future day.