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

With this Treasury Laws Amendment (2021 Measures No. 1) Bill, the Liberals, under Scott Morrison, are attacking the rights of every shareholder in Australia, and they're doing it all because of an infinitesimally small number of class actions. The Treasurer actually says, in his own explanatory memorandum, that the main impact of these changes will be to reduce the amount of time that companies and company officers must spend on ensuring that they have complied with their obligations to provide accurate and timely information to shareholders. Heaven forbid that company officers spend time on ensuring that they are making timely and accurate disclosures to shareholders!

This bill is bad news for Australian shareholders and it is bad news for the Australian economy. Mum-and-dad investors, self-funded retirees and other individuals across Australia make life-changing investment decisions on the basis of what they are told by companies and by company directors. Australian investors know that they can generally rely on what they are told because the laws introduced by the Howard government impose strict disclosure requirements on companies and company directors. Not anymore, if the Morrison government gets its way. The changes proposed by the Morrison government would put the narrow self-interest of a tiny number of individual company directors above the interests of millions of mum-and-dad investors and self-funded retirees and of large institutional investors.

According to a survey conducted by major commercial law firm King & Wood Mallesons, these changes do not even appear to be supported by a majority of senior company directors. The Mallesons survey asked 195 company directors and senior executives about the Morrison government's temporary changes to continuous disclosure laws. Only 11.3 per cent said that they relied upon those changes, and almost 80 per cent said that the changes should not be made permanent.

Why would the vast majority of company directors and senior executives oppose the Morrison government's attempt to make it easier for people like them to mislead or withhold important information from shareholders? My theory is that it's because most company directors understand that Australia's strict continuous disclosure laws are ultimately good for everyone. They make Australian companies more attractive to investors, including international investors, and so make it easier for Australian companies to attract capital. In other words, Australia's strict continuous disclosure laws make it easier for company directors to do the job that they are there to do, and that is to promote the interests of shareholders. I also think that most company directors in Australia do the right thing and have no problem with laws that require them to do no more than the right thing, and that is to provide shareholders with timely and accurate information about the company they've invested their money in.

It must come as a shock to the Morrison government to learn that there are people out there in the Australian community who are happy to do the right thing and who actually have no problem with laws that keep them accountable! This is a foreign idea to the Morrison government, which is a government at war with transparency and any notion of accountability.

When the Auditor-General discovered that the Morrison government had used $100 million of taxpayers' money as a Liberal Party slush fund, in the so-called sports rorts affair, and revealed that the government had paid Liberal donors in Western Sydney $30 million for a $3 million block of land, the Prime Minister did not apologise. No minister took responsibility. No minister was reprimanded or sacked. Instead, it was the Auditor-General who was punished, with a cut to his budget, because it's never the wrongdoer who is punished or held accountable by the Prime Minister.

The Prime Minister has made it clear that ministers in his government can get away with pretty much anything. They can rort grant programs, use forged documents and even call a young woman who alleges that she was raped—

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The minister, on a point of order?

Luke Howarth (Petrie, Liberal Party, Assistant Minister for Youth and Employment Services) Share this | Link to this | Hansard source

It's in relation to relevance. The member opposite is not being relevant to the bill.

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

I am speaking to the second reading amendment.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Order! Your point is overturned. Please proceed.

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

It's never the wrongdoer who is punished or held accountable by this Prime Minister. This Prime Minister has made it clear that ministers in his government can get away with pretty much anything. They can rort grant programs, use forged documents and even call a young woman who alleges that she was raped in the office of the Minister for Defence 'a lying cow'. Ministers can do all those things and more with complete impunity. And with this bill the Prime Minister is telling company directors that he wants them to be able to act with impunity too, without having to worry about being held to account by shareholders. To the great credit of most company directors in Australia—at least, according to King & Wood Mallesons' survey of company directors—they have rejected the need for these changes, because most company directors are not like the current Prime Minister. Most company directors and most Australians have more integrity in their little fingers than the Prime Minister has in his entire cabinet.

So afraid of scrutiny is this Morrison government that it has gone to an enormous effort to prevent Australian shareholders even finding out about the measures in schedule 2 of this bill, let alone raising concerns. The Senate committee tasked with inquiring into this bill was given only three weeks to receive submissions from members of the public and issue a report. With the support of every single crossbench senator, the Senate voted to extend the committee's reporting date to 30 June 2021 so that mum-and-dad investors, self-funded retirees, large institutional investors and everyone else affected by this bill would have an opportunity to be heard. But, disgracefully, the Liberal-controlled Senate committee ignored the will of the Senate and tabled its report early, on 12 March. Not even the Treasury had time to make a submission to that inquiry. In fact, no government agency or department made any submission at all—not ASIC, which is opposed to the measures in schedule 2; not the ACCC, which is also opposed to them; and not the Attorney-General's Department. If the Treasury, the Attorney-General's Department, ASIC and the ACCC don't have time to prepare a submission, what hope do the mum-and-dad investors and self-funded retirees of Australia have?

Fortunately, the Senate has told the Morrison government that it will not let it ram these changes through the parliament. Yesterday, with the support of all Senate crossbenchers, except Senator Griff from Centre Alliance, the Senate supported Labor's motion to establish a new inquiry into this legislation. That inquiry will not be controlled by the reckless incompetence of the Liberal Party and will report on 30 June 2021. Though we have some concerns about the long-term effectiveness and desirability of virtual annual general meetings, Labor have told the government we're prepared to work with the government to ensure that the measures in schedule 1 can pass the parliament this week. (Time expired)

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I rise to make a few brief remarks about this bill. Further contributions on behalf of the Greens will be made by our Treasury spokesman, Senator McKim, if and when the bill reaches the Senate, which, sadly, it looks like it might, given the government's determination to push this through.

This Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 is the latest example of the government using COVID as a cover to wind back protections for individuals to instead give even more power to the big corporations and the superwealthy that run this government. They're trying it on with the repeal of the responsible lending obligations, which is going to once more give banks a licence to engage in predatory lending—even after the royal commission said, in recommendation No. 1, to keep those rules in place to protect consumers. They're trying it on with their industrial relations bill, which is going to further entrench insecure work and keep wages low, and they're trying it on with this bill, which will water down the requirement of companies to make continuous disclosures to the market and shareholders of information that is material to how much a company is worth or a company's valuation.

Apparently, the economic recovery after COVID is advanced enough to take away extra income support for jobseekers at a time when there are two million either without work or without enough hours of work. All the people on JobSeeker will be plunged below the poverty line, because apparently we're out of the woods—lollies and lemonade are falling from the sky and everything is okay—so we can cut JobSeeker back to below the poverty line and take away wage subsidies.

This will hit hard, especially in my area of Melbourne. A lot of the businesses that have been hit hardest by COVID are still being hit because they're businesses in events and hospitality and the creative sector. They rely on getting lots of people together in the same place. They just can't do it, because of social distancing restrictions, because we are still dealing with a pandemic. Apparently it's okay for those businesses to get cut and to fall off the JobKeeper cliff, and apparently it's okay for people who are unemployed in a pandemic and looking for work to have their support payment cut to below the poverty line.

According to the government the economic recovery is well advanced, so we don't need those supports anymore. At the same time, they say the economic recovery is in so much trouble that we need to rig the rules even further—to benefit the rich and powerful—so that the people who run companies don't have to tell the rest of the world what's going on. It's one rule for the big corporations and billionaires, where they get more and more special treatment, and another for everyone else, where they're asked to live on wages below the poverty line and be with two million people either without a job or without enough hours of work.

The pandemic is being used as a poor excuse to pursue a neoliberal trickle-down agenda, which has nothing to do with building a better recovery and everything to do with this government helping out their mates, the people who make donations to them. That is why they are doing this. The big corporations have said, 'We want the opportunity to tell people less about what goes on behind closed doors, so would you please do it for us and why not use COVID as an excuse.' The government has said, 'Yep, we'll tell everyone that the economy is going so well that we don't have to pay JobSeeker above the poverty line and we can cut JobKeeper. Then we'll tell them, in the same breath, that the economy is doing so poorly that the rich and powerful deserve more special treatment.'

The thing is, if you take the government and their rhetoric at face value—they come in here saying that they believe in the markets, that they believe in open and transparent markets and the market will solve everything. We know that's not true. We know that, left unchecked by parliament, the markets can create massive inequalities. We have seen, for example, billionaires' wealth in Australia rise by around 50 per cent—it depends on the estimate; it's at least 25 per cent—and up to 70 per cent during the pandemic while everyone else is doing it tough. We know that markets can lead to inequality when left unchecked, but if you accept the government at face value they say they're the party of markets.

But markets are meant to work on the basis of equal access to information. That's why there are rules against things like insider trading. The basic rule is, if you're in a corporation and you've got access to information that's going to affect the price of your shares, the people who own the company have to release it. We have these rules set out that require companies to make what are called continuous disclosures and help create a level playing field, so the theory goes. This, in turn, so the theory goes, taking the government at face value, helps ensure the integrity of Australia's share market and benefits investors and business alike.

This bill goes in the opposite direction and says it's okay to keep things secret. It might help the big corporations but it won't help ordinary shareholders. The government is now saying, 'That's okay.' As Ben Hardwick from Slater and Gordon put it:

If you truly believe in markets then you'll consider transparency and accountability to be good things, because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences then you'll take a different view

This government is all for crony capitalism—that is, they just do what the corporations and the billionaires ask them to. Even when it violates every principle in their so-called professed ideology, they don't care, because they want to keep getting donations from the billionaires and keep the revolving door going between the big corporations and seats in parliament. In return they will do whatever is asked. The government are nothing more than big corporate shills.

Under the existing continuous disclosure framework, civil action can be taken. So, if you're ASIC or a private litigant, where there's a failure to disclose material information regardless of knowledge, recklessness or negligence, you can go to court. That puts the obligation on directors to find out what is going on and tell people what they need to know if it's going to affect the value of their shares. But now schedule 2 of this bill relieves the directors and CEOs of this supposed burden. Instead, civil action to succeed is going to require proving that those running a company knew they were in receipt of relevant information and that they should have disclosed it—effectively, it reverses the onus of proof. If you're sitting there in a corporation and you know something that might affect the value of the shares, at the moment you're obliged to release it to the market. This is going to reverse it so that the shareholders have to have telepathy and know what they don't know. The shareholders have to know that the corporate directors know something and then take them to court and prove it. It reverses the onus of proof, and it completely and fundamentally changes the way the system operates. It will now be okay to sit on information that might affect people's share investments just because you as a director of a company are sitting there and you think it might be in your or the company's interests.

This is going to pave the way for insider trading. For everyone who felt they could make rational investments in particular companies, this ends that. It privileges those in the know. It privileges the rich and powerful, because now they can know something about their company, know that the company is about to tank or rise, and then do whatever they want with their shares—make a squillion out of it. Everyone else will be left to pick up the pieces, and there's nothing they can do about it because the government reversed the onus of proof. That's what this bill is about—benefiting the people who run the big corporations because they're the people who donate to the Liberal Party. The millions of people who rely on what they think is the fair and efficient function of Australia's stock market are going to lose out.

The government's also selling this bill with the argument that it'll somehow reduce the prospect of class action litigation being undertaken on behalf of investors. Apparently, according to this government, shareholders exercising their rights collectively and holding companies to account is too much of a burden for companies and their highly paid executives and directors. What a furphy. The point of class actions is to enable ordinary people who aren't in a position to commence litigation against a big executive, corporate director or corporation to have access to justice. Not many people have access to the money to do that themselves. Class actions, when there have been a lot of people who have been affected, allow people to join together, have strength in numbers and say, 'We'll take the big corporation on.' That is a principle which should be defended. The government obviously doesn't like that principle, but the government says that there are too many of these kinds of class actions against directors, so it's got to change the law to give these corporate directors the kind of protection that I've just outlined—the ability to do what is illegal. By ASIC's count, there's been an average of just five class actions a year for the last 20 years, but, even so, as ASIC—ASIC!—points out, the economic significance of fair and efficient capital markets dwarfs any exposure to class action damages. Class actions and the prospect of them support the enforcement regime of ASIC—the regulator—and help them ensure that corporate Australia does the right thing.

But this government is all about allowing big corporations and directors to do the wrong thing. There are things that a director or corporation might do for which at the moment you could take them to court and say, 'You've ripped me off,' or 'You've engaged in insider training.' Under this bill, you're not going to be able to do that, because the onus of proof is going to be reversed. You're going to have to prove what was inside the head of the corporate director. If you can get past the walls of lawyers and through the walls of their mansions and through the security guards, maybe you've got a chance of doing that, but that's not what most people are going to be able to do. Most people are going to lose.

The Greens will not be supporting schedule 2 of the bill. Its only purpose is to benefit those on the inside and those with market power. It is going to come at the expense of millions of everyday Australians. That's what this government is about. The government acts for big corporations and billionaires, and everyone else is left to pay the price. The Greens will hold this government to account and will not support this move that would pave the way for insider trading and the rip-off of everyday people in this country.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

Well, here we are again. Under the cover of COVID, we've seen this government weaken superannuation and move to cut wages and conditions and now, surprisingly even for this government, to weaken the protections for mum and dad shareholders by weakening what is known as the continuous disclosure regime, which ensures that people who invest in shares in Australia have all of the information that company directors have at their disposal. That's the current system, and this tax law amendment bill moves to weaken it.

I also want to point out something about this government, because I find this quite interesting. Usually, when they do something that they want talked about and about which they want the spin to roll out across the community, they give the bills fabulous names like 'strengthening economic security' or something—even though quite often they do the opposite. But, when they want to hide something, they stick it in these tax law bills, with names like 'Treasury Laws Amendment (2021 Measures No. 1) Bill.' That's what this is. In it is a profound change to the way our entire share system works in Australia, and most mum and dad investors would not know that what they have assumed to be the case for decades is about to change.

I want to talk about the two schedules to this bill, because they are quite different. The first one, schedule 1, allows companies to hold virtual AGMs and execute a range of other government activities by electronic means. Currently they can do that, because of COVID, until 21 March. This extends that until September 2021. That's essentially a good thing. It's still very difficult for shareholders to hold AGMs. We still don't know what's going to happen with borders. It's a sensible thing. Even though on our side we have real concerns about the way that some of those AGMs do or don't allow shareholders to participate fully, we understand that, as a temporary measure, that's necessary and that's fine.

Schedule 2, however, is the one that has the problem in it. It extends what was a COVID-19 measure, which weakens Australia's continuous disclosure and misleading and deceptive conduct provisions, and it makes it permanent. Again, it's not extending it temporarily because there's a reason out there that requires it; it is permanently making this change.

There are probably people listening to this who don't know what this means—including mum and dad shareholders who might not know, because, again, they assume that the open and transparent system that we have is normal. It turns out that it's not and we're about to lose it. Let me go through a little bit of the history. Before COVID, we had a continuous disclosure regime. It was actually introduced by the Howard government in 2001. Companies and company directors were required to disclose publicly any information that was not generally available and that a reasonable person would expect to have a material effect on the price or value of the company's shares. So, if directors knew something that shareholders should know, they had to tell them. In 2001, John Howard, a Liberal Prime Minister, introduced this continuous disclosure regime. If a company or a company director failed to comply with those obligations, they could face a civil penalty action either by a shareholder or by ASIC. However, there was an out for the director, who would not be found liable in civil penalty proceedings for breaching those obligations if he or she took all reasonable steps to ensure that the company complied with its disclosure obligations and thought the company was complying with those obligations. So, again, directors were obligated to provide full disclosure to institutional investors, superannuation companies that invested and mum-and-dad shareholders. That's the way it's been since 2001, and it has underpinned a very strong, reliable and transparent share market system in this country. It's been a very good thing.

Under COVID, the government made some temporary changes, which said that companies and directors that failed to disclose price-sensitive information are liable to shareholders for the failure only if the company or director acted with knowledge, recklessness or negligence. That's quite a change. This bill makes that change permanent. It also makes another change permanent: it makes changes to the misleading and deceptive conduct provisions that currently apply to companies so that, in order for a company or director to face civil penalties for providing misleading or deceptive information to shareholders or the market, ASIC or an affected individual would have to prove that the company or director acted with knowledge, recklessness or negligence. So, from a situation where directors are obligated to disclose information that shareholders should know, we're moving to a world in which a shareholder would have to prove that a director acted negligently or recklessly by not providing information, even though the shareholder might not know what that information is because they haven't been given it. So this is an extraordinary situation where, first, in order for a shareholder or ASIC to take action against a company, they have to find out this information that has been kept secret, and then they have to prove that the director or the company acted with knowledge, recklessness or negligence. So the onus of proof here is on the shareholder. That's an extraordinary change. It's extraordinary that the director isn't obligated to make full disclosure anymore, but it's even more extraordinary that the onus of proof has moved to the shareholder.

Let's make no bones about this. These changes make it easier for companies and directors to get away with failing to provide price-sensitive information to the market. The government explanatory memorandum says it reduces the amount of time entities and officers must spend on assurances that they have complied—extraordinary. It makes it easier for companies and directors to get away with failing to provide price-sensitive information to the market. That's what it does. It makes it easier for companies and directors to get away with withholding information from, or providing misleading information to, the market or shareholders, because, in order for those directors to be brought to face the consequences, a shareholder has to prove that they knew and that they acted recklessly—an extraordinary change. It puts the interests of individual company directors above the interests of mum-and-dad investors, self-funded retirees and large institutional investors, all of whom rely on Australia's strict disclosure laws now. When we're talking about mum-and-dad investors, by the way, we're not talking about people who necessarily fully understand the operations of the market. We're not talking about people who necessarily follow all of the workings of a business in great detail. We're talking about people who quite often invest in companies based on their reputation. We now have a situation where directors could get away quite easily with not providing investors with the information that they need. It really is quite extraordinary.

I'm going to quote from the Australian Shareholders Association head, Allan Goldin, who said:

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—

the 'honest idiot' defence, as it's known. It's also known as 'don't ask, don't tell'. I think we've seen a bit of that in the Prime Minister's department, not that I would ever call the Prime Minister an honest idiot. But I would point out that the 'don't ask, don't tell' regime we have seen from this government will now apply to directors as well. It is quite shocking.

With something that is this serious, something that changes the fundamental understanding people have of the information they get from companies to inform their investment decisions, you would expect there to have been a comprehensive Senate inquiry. There was the beginning of a Senate inquiry, but it was cut short by the Liberal-controlled committee. It was such a short time frame that even the Treasury and ASIC didn't get to make submissions—honestly!

While we know that the schedule 2 changes are supported by the Australian Institute of Company Directors—I totally understand that—and the Business Council of Australia, they aren't universally supported. In fact, some extraordinary organisations have come out and said, 'This isn't right.' A 2020 survey of 195 senior company executives, conducted by the law firm King & Wood Mallesons, found that only 21.5 per cent of executives thought the temporary changes to continuous disclosure laws should be made permanent. Over 80 per cent said that the changes had not altered the way in which companies were making disclosure decisions. In other words, even the temporary changes don't have many friends. There is strong opposition to schedule 2 by a large and diverse coalition of parties, including the Australian Shareholders Association, plaintiff law firms and the Australian Council of Superannuation Investors.

Fortunately, the Senate has now decided to reinstitute a Senate inquiry, which won't report until June, so finally we might get a chance to look at this. If this government wants to get schedule 1 through and extend the ability of companies to have AGMs virtually, then it needs to split this bill. We're happy to split it so that schedule 1 can go through and schedule 2, which makes fundamental changes to the way the share market operates in Australia, can be properly scrutinised by the many stakeholders in this area.

You have to ask, quite frankly, why the government would do this. Why is the government making it easier to withhold information from shareholders and making it harder for shareholders to take action? The only reason the Liberal government has given is that these changes are needed to protect company directors from 'opportunistic class actions'. Presumably what they're saying is that, because there are some class actions against directors, every shareholder has to have their protections weakened in order to protect directors. Let's look at the problem the government is trying to solve. According to figures from the law firm Allens, in 2019 there were 10 shareholder class actions filed in Australia. In 2018 there were 20. It was a big year. In 2017 there were 15. In 2016 there were fewer than five, and the average for the last 20 years is about five. So, in order to protect an average of five companies a year from class actions—and I'm not saying whether they're opportunistic or real or whatever—the access of every shareholder in Australia to relevant information that informs their investment decisions will be weakened. What an extraordinary thing! And something this profound is not called the 'Tax Laws Weakening Continuous Disclosure Regime Bill'; it doesn't even have a name. It's hidden in a tax laws amendment so that the vast majority of people will not see it.

This is extraordinary, coming from a government that thinks it's about business. This is extraordinary, coming from a government that pretends that it's the economic manager of the country. Our share market—the trust that people have in it, its transparency and the way it works—underpins investment in this country, investment by businesses within Australia and by international investors. If you weaken the trust that people have in the information that informs their investment, you weaken the trade and investment in Australia. Don't you get that, this party of business and this party of the market?

When people are going to risk their money on an investment and you tell them, through this sort of action, that they can no longer trust the information they're getting, they will go and invest elsewhere. They will invest elsewhere because they're not stupid, particularly big institutional investors. You will weaken our share market and you will lessen the investment that comes into Australia because you want to protect, from your own explanation, the somewhere between five and 20 companies that face class action each year in Australia—that's it. Every shareholder is treated badly in order to make that small protection, this focus that you have on class actions. This is a shocking piece of legislation. Now that the Senate has reinstated the inquiry, if you want to get schedule 1 through, to temporarily extend the capacity for AGMs to be held virtually, which is important, you're going to have to split the bill. That's your option now. Schedule 2: you shouldn't be doing it and you really have to rethink it.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

I'll be relatively brief because the member for Parramatta and the member for Whitlam before her have characteristically nailed all of the important points. The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 is really two bills smashed into one; two schedules smashed into one set of legislation, and I think for not the right reasons. The reason why these two things are being considered together is that the government knows we are prepared to be accommodating when it comes to the conduct of virtual AGMs, recognising the difficulty in COVID time of getting shareholders together. We want to make sure that we can find ways to make that more meaningful, to make sure that shareholders can hold executives and boards accountable in the time of COVID, but we are prepared to be reasonable about the conduct of those AGMs for a little while longer.

The second schedule in the bill, as the member for Parramatta and other speakers before her have pointed out, is much more problematic from our point of view. It weakens Australia's continuous disclosure framework and the misleading and deceptive conduct provisions permanently. The reason I emphasise 'permanently' is that there's a big problem here. The government says: 'The economy is going so well that we can pull out this extraordinary support for workers. JobKeeper has got to end because things are going so well. The whole world has returned to normal and the Australian economy is galloping. There's no need for these extraordinary measures in our labour market.' At the same time and on the same day, the same government says: 'Oh, no, things are really difficult. We need to leave these accommodating arrangements in for business so that they can dodge their continuous disclosure obligations.' Those opposite can't make those two arguments at the same time. They have to choose. It's one or the other. Are things going really well and provisions need to be pulled out, or are things really difficult and so we need to leave provisions in? They can't have one approach to one part of the economy, the labour market, and another approach to another part of the economy, the corporations subject to continuous disclosure.

As I said, we've got our concerns with the first bit. We're prepared to be supportive. There's absolutely no reason why we can't consider those two bits separately. But the government, in the usual way for the usual political reasons, has left them together. There are lots of problems, as others have said, with the changes proposed to the continuous disclosure regime. From conversations today, I know that elements of the business community have a different view to mine. That's part of a respectable exchange, and I'm grateful for the conversations that I've had throughout the course of the day. But we do have issues of substance and substantial concerns with the second schedule, and that's why we are taking the steps that we're taking in the House today.

As we know, these were supposed to be temporary measures, but instead, in my view, the government is using this pandemic as an excuse to make them permanent in a way that will do a lot of damage to the way that our markets operate in this country. What's being proposed here is in many ways a solution looking for a problem. It's one of those things that the government has had in the top drawer for some time, and they are hoping that Australians are sufficiently distracted by what's going on with the pandemic, cuts to JobKeeper and the rest of it that they are able to get away with making these changes permanent. We saw it in responsible lending laws. We've seen it in other areas as well.

If you go to the facts and you go to the views of important stakeholders, you discover a few things about what's really going on here. The Liberal Party, those opposite, are obsessed with class actions, when class actions make up under one per cent of cases filed in the Federal Court. They affect only a tiny number of companies that have done the wrong thing. Think about these changes more broadly. Just last year, 195 senior company executives from King & Wood Mallesons found that only every fifth person thought these changes should be made permanent. Over 80 per cent said that the changes hadn't altered the way in which companies were making disclosure decisions.

There's strong opposition to these changes, from the Australian Shareholders Association—we should listen to them—from plaintiff law firms and from the Australian Council of Superannuation Investors. In my view, if the government were confident that they had a good case to make here, they wouldn't have truncated the inquiry process. They made that Senate process so short that many who wanted to make a submission were unable to do so in time. We already know that ASIC and the ACCC have advised the government that the pre-COVID continuous disclosure and misleading and deceptive conduct provisions should be retained. ASIC told the Treasury that these arrangements were a 'fundamental tenet of our markets and particularly important during times of market uncertainty and volatility'. ASIC said that the laws were working well, that they operated to increase the attractiveness of Australian markets for investors and that the economic significance of a fair and efficient capital markets dwarfs any exposure to class action damages.

So this bill as it stands, the second part of it, will hurt mum-and-dad investors, a point that the member for Whitlam has made repeatedly. It will weaken Australia's Corporations Law. It will make it easier for companies and company directors to get away with withholding information from or providing misleading information to their shareholders, and without proper disclosure rules that is much more likely, in our view. These rules don't just protect the retail shareholders—that's incredibly important—but they make businesses stronger and more attractive to investors as well.

Those are all the reasons why we are not supportive of the second schedule. We are not especially surprised to see the government using this pandemic as an excuse to try and make these temporary arrangements permanent. They are never on the side of ordinary Australians—ordinary mum-and-dad shareholders, ordinary workers, ordinary people trying to save for their retirement. Really, right across the board, we've seen lots of examples. Again I return to the fundamental point: if the economy is so weak and uncertain that business requires the extension of what were proposed to be temporary arrangements, then why doesn't that apply to workers who will have their JobKeeper cut this month as well? You can't have it both ways. Either the economy is too weak to remove support or it's too strong to leave it in there. What we're seeing here is a pretty blatant attempt to permanently change—in a detrimental way; in a way that key stakeholders don't support—the arrangements which are so important to the efficient functioning of markets in this country.

Ed Husic (Chifley, Australian Labor Party, Shadow Minister for Industry and Innovation) Share this | Link to this | Hansard source

I had not intended, initially, to speak on the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. But, in reading through the material that supports this legislation, listening to colleagues and understanding what is proposed here, I feel it's a responsibility of parliamentarians to get up and basically ask the Australian people whether or not they're in favour of a system that would allow—and not just in terms of mum-and-dad investors being potentially ripped off, which is a serious concern, as has been described already—this creep that is occurring, where we see the dilution of accountability and transparency.The creep that I refer to is occurring in behaviour within government, within the federal government itself. Whenever they are required to disclose what they are up to, how they make their decisions or the quality of their decision-making, they always now default to stonewalling, refusing to disclose information and making it harder for the public to understand. Look at the way that freedom-of-information requests are being managed. We'll see it potentially on display next week when the other place holds estimates and we count the number of times ministers or those representing them use the old technique of taking a question on notice—not answering a question but giving the default position, 'We'll take it on notice.' At some point down the track they'll reveal what's going on.

An honourable member: Within the same year.

Within the same year, hopefully, but usually they'll attempt to hide the information. We see them claim, for example, that they want to bring in a national integrity commission. That claim was made two years ago. We still see nothing. When the framework is proposed, it is so weak it's probably weaker than the paper it's written on. We see all these efforts building up, and now they want to extend it to corporate Australia and they want to do it through this bill. They want to make it easier for directors to not have to be accountable for the decisions they're making.

Through the eighties—and we've also seen in recent times—we saw some major corporate collapses and we saw some pretty bad business behaviour. I absolutely do not believe that all corporate or company directors behave in that way. In fact, many are horrified by it. And, in fact, the propositions that are being put forward in this bill are being resisted by many in the business community because they know exactly what this will do. The reason I speak today is that I don't want to see those corporate collapses re-emerge in this day and age. Lessons are there to be learnt, not to be unlearnt so that we go back and make the same mistake. We cannot see that for those companies, those investors, those shareholders, those employees, those supply companies, those small businesses, those contractors—all those who earn their living from the proper functioning of these firms. We cannot see them affected because of a corporate collapse that may have resulted from the actions of a few directors who knew something was not right in what they were doing—who knew that, if how they had intended to operate was disclosed, it would not have met expectations within the business community. If those companies collapse, there are a lot of people who lose out, and they don't get back what they put in. We know it. We know what happens: the big creditors get looked after, but it's all the other, smaller ones, this whole string that appears after that collapse, who lose out—and it's particularly the employees, who I speak for today, the workers of those businesses, who will lose out.

We shouldn't have it that the government has to underwrite it through the mechanisms we have to cover those redundancies. The taxpayer should not be required to step in and fund those redundancies because those firms collapsed. The reason I speak today is that I feel strongly about these types of measures—the dilution of what the Howard government brought in. I don't make a habit of cheering on legislation brought in by that very conservative government, but, on this, they were right. They were right where they said that companies and company directors are required to disclose publicly any information that (1) was not generally available and (2) a reasonable person would expect to have a material effect on the price or value of a company's share price. Further, they were right where they said, if a company or a company director failed to comply with those obligations, they could face a civil penalty action; they would be held accountable for their action or, importantly, their inaction.

Again, as the Labor leader has said, we have sought to support, in the course of the pandemic, a number of regulatory and legislative measures designed to assist. We did that then, but we do not agree with—we actually oppose—any suggestion that this regime that was brought in temporarily be extended. We don't think it's good, and schedule 2 of this legislation would make that permanent. Companies and directors that fail to disclose price-sensitive information either at all or in a timely fashion are only liable to shareholders for that failure if the company or director acted with knowledge, recklessness or negligence. The thing is this: that is going to be very difficult to establish. It is very hard for people outside of the firm to know that.

The government's own explanatory memorandum says that this is about reducing the amount of time entities and officers must spend on an assurance that they have complied. They're basically admitting that they are watering down everything required for compliance, transparency and accountability. This is not good for corporate Australia. This is not good for working Australians. If this leads to corporate collapses—we have seen the type of behaviour that creeps in and sets in—it's not good, long term, for the economy. It will potentially stifle investment flow. It will potentially make it harder for companies to raise capital. It will potentially make it harder for companies to grow. From a business perspective, it's bad.

As I said, I don't think any working Australian should suffer as a result of the type of corporate collapse that might be triggered because of the bad behaviour that this is starting to let creep in. This is wrong, and they should not pay for that. All those people that we know who went through One.Tel, Ansett—

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Crown casino!

Ed Husic (Chifley, Australian Labor Party, Shadow Minister for Industry and Innovation) Share this | Link to this | Hansard source

Yes, Crown casino. It's not the government and their corporate crony mates who pay that price. They get off; they escape. But what about the mums and dads—not only the shareholders but the employees—with mortgages, with families to raise, with bills to pay? This is so wrong. They should hang their heads in shame. It's one thing for it to be temporary; it's another thing for it to be permanent. It is not right at all.

We should speak strongly on this. We should say we can do better. We should indicate that there is something right in accountability and transparency, not just for the 'Aha, gotcha!' moment but because of the teachable experience, the fact that we can do better and the fact that people know that they can't break the boundary; they can't go beyond the boundary and break the rules. We cannot have the crony capitalism that this will trigger. I emphasise this: we have to draw the line now on the way this government is starting to continually default, refusing to be accountable, refusing to be transparent and allowing big government or big business to get away with that type of bad behaviour. It's not good for our community. It is definitely not good for our nation.

Kevin Hogan (Page, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

Firstly, I would like to thank those members who have contributed to this debate on the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. Schedule 1 to the bill extends temporary relief, allowing companies to host meetings virtually and to send meeting related materials and validly execute documents electronically. This will enable companies to continue to operate while uncertainties remain due to COVID-19, and public health orders are introduced from time to time.

This extension contains enhancements to the original temporary relief, in response to feedback received during consultation. The relief ensures regulatory obligations are essentially the same regardless of the technology used to comply with them. In response to the positive feedback from consultation, the government proposes to put in place permanent reforms that will continue to allow companies to electronically sign company documents and send meeting related materials electronically when this temporary extension ends.

The government also proposes to conduct an opt-in pilot for hybrid annual general meetings in which shareholders can choose whether to attend meetings in person or to attend them virtually. This pilot will commence when the extension to the temporary relief ends. The aim of the pilot will be to encourage companies and shareholders to engage with technology, with a view to considering whether future permanent reforms are needed to further support companies to use technology effectively to engage positively with their shareholders.

The government is committed to evaluating and improving regulatory settings to support Australia's economic recovery plan to create jobs, rebuild our economy and secure Australia's future. Schedule 2 to the bill will amend our continuous disclosure laws so that companies and their officers will only be liable for civil penalty proceedings where they have acted with knowledge, recklessness or negligence with respect to updates on price-sensitive information to the market. Introducing this requirement means that companies and their officers can more confidently provide guidance to the market. This will benefit investors and businesses by ensuring the market continues to stay informed and function effectively. Reforming continuous disclosure obligations will allow businesses to allocate resources towards improving efficiency and output. This will make it easier for businesses to invest, to create jobs and to grow the economy. I commend this bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that the words proposed to be omitted stand part of the question.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that the bill be now read a second time.