Zed Seselja (ACT, Liberal Party) Share this | Hansard source

I want to add my words in support of the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014. In the year and a half since coming to office, the Abbott government has done significant things for our nation. We have repealed the carbon tax—that Labor want to bring back; we have repealed the mining tax that, of course, made no money; we have stopped the boats and the deaths at sea; we have signed free trade agreements with our Asian partners and we are getting on with the job of fixing the debt and deficit legacy of the Labor government.

Those of us on this side of the chamber are also committed to removing unnecessary red tape on business—red tape that hurts productivity, halts investment and innovation and stifles job creation. It bears repeating that, since the 2013 election, the coalition government has more than doubled our election target of red-tape reduction, announcing over 400 measures across the whole of government at a net reduction of over $2.1 billion in compliance costs. As part of the 2014 spring repeal day on 29 October, the government continued this work by removing nearly 1,000 pieces and over 7,200 pages of legislation and regulation. This continues the work of the first repeal day in March, when the government removed over 10,000 pieces and 50,000 pages of legislation and regulation—over $700 million of compliance costs.

In contrast, under the previous government we saw Labor introduce more than 21,000 additional regulations, putting roadblocks in the way of investment and job creation, despite Kevin Rudd's promise of a 'one regulation in, one regulation out' policy. Of course, we all remember Craig Emerson saying in 2008 that Labor would take a giant pair of scissors to the red tape that was strangling small business.

This is important work that is ongoing, and it is important to remember that it is not deregulation for its own sake. This is removing regulations to boost productivity, to build jobs and to build the economy. It is not just about removing regulations, though; it is also making regulations better. We on this side do agree that sometimes regulation is necessary, but when it is it needs to be targeted and it needs to be effective. Businesses have told the government that there is work to do in improving regulations and there are ways we can build regulations to build productivity. We know that productivity has been flatlining in this country. We know that in 2014 Australia ranked 124 out of 148 countries for burden of government regulation in the World Economic Forum global competitiveness index. Whilst we did go forward four spots last year, we are still well behind where we need to be.

The Productivity Commission has also estimated that regulation compliance costs could amount to as much as four per cent of Australia's GDP, so it is vital we do more to help free businesses of unnecessary burdens and costs so they can contribute to our economy and build growth. This reform package reduces the regulatory burden imposed on Australian businesses and it is estimated it will reduce business compliance costs by around $14 million per year. The bill also contains measures to make government processes more efficient, reflecting the government's commitment to seek opportunities to improve efficiencies in whatever way we can. The measures contained in the bill will better balance the rights of shareholders to raise issues with a company and the cost to companies of being required to call and hold a general meeting. It will improve and reduce remuneration reporting requirements, clarify the circumstances in which a financial year may be less than 12 months, exempt certain companies limited by guarantee from the need to appoint or retain an auditor, improve the operation of the takeovers panel and extend the Remuneration Tribunal's remuneration-setting responsibility to include certain statutory bodies.

I would like to talk about each of these measures in turn. Firstly, the abolition of the hundred-member rule: as part of this package the government is removing the requirement for directors of a company to hold a general meeting on the request of 100 shareholders. This seeks to strike a better balance between the interests of minority shareholders and shareholders as a whole. In large corporations, the hundred-member rule allows groups holding less than one per cent of voting shares to force a company to incur the significant costs of holding a general meeting. Often they do this and have the vast majority of shareholders reject their motion. For example, in 2012 the hundred-member rule was used by GetUp! to require Woolworths to spend nearly $2 million to hold a general meeting at the behest of just 210 shareholders, or 0.05 per cent of all shareholders. At the general meeting the resolution put forward by this group was rejected by over 97 per cent of shareholders. It is certainly important that all shareholders have their say, and it will still be the case that they can with this reform; however, it is also important that these situations do not impose disproportionate costs on business. One hundred shareholders will continue to be able to put a resolution on the agenda at a general meeting and circulate a statement to other shareholders; in addition, shareholders with at least five per cent of the votes that may be cast at a general meeting will continue to be able to require the directors hold a general meeting. This measure is supported by both industry stakeholders such as the Australian Institute of Company Directors, the Governance Institute of Australia and the Business Council of Australia as well as shareholder groups such as the Australian Shareholders' Association. It is estimated this measure will save business around $1.5 million per annum in compliance costs. I am aware that some senators, particularly Senator Xenophon, have raised questions and concerns about this provision. I assure Senator Xenophon and others who may be concerned that the government still believes shareholders should have their say, and they will have their say. That is why five per cent of shareholders can still trigger a general meeting, and a group of 100 shareholders will still be able to circulate statements and put resolutions on agendas for general meetings; they will still be heard.

The next important element of this package is that the government is improving the disclosure of executive remuneration information in Australia by ensuring the information provided is useful for shareholders and investors. This measure removes the requirement for unlisted disclosing entities to prepare a remuneration report. It is estimated that this measure will save unlisted disclosing entities around $8.5 million per annum in compliance costs. The remuneration report is simply not relevant for unlisted disclosing entities such as, for example, unlisted companies, unlisted debenture issuers such as Banksia Securities, and unlisted managed investment schemes. Unlike listed entities they are not required to have their remuneration report adopted by shareholders through a non-binding resolution and are not subject to the two-strikes test. Australia's two-strikes rule allows shareholders to vote to spill the board if the remuneration report receives a 'no' vote of 25 per cent or more, two years in a row. This measure also improves the usefulness of information on options granted to key management personnel. It has been informed by feedback from users of remuneration reports. Rather than reporting the value of lapsed options, this will be replaced with a requirement to disclose the number of lapsed options and the year in which the lapsed options were granted. The requirement to disclose information on the percentage of remuneration consisting of options will be removed, as this can already be calculated from other information in the remuneration report. The government is also clarifying when entities—companies, registered schemes and disclosing entities—can change their year-end dates.

Sitting suspended from 18:30 to 19:30

I believe I was just starting to speak about the aspects of the bill relating to changing financial year-end date. As I said, the government is clarifying when entities—companies, registered schemes and disclosing entities—can change their year-end dates. This measure will put beyond doubt the conditions under which directors can determine that a financial year is to be shorter than 12 months by more than seven days. The bill clarifies but does not change the legal operation of the existing law. These are technical amendments which will only affect a small number of businesses. They will predominantly affect entities that have had to amend financial years due to structural changes.

The government is also removing the requirement for certain companies limited by guarantee that are not required to undertake an audit to appoint or retain an auditor. Currently all public companies are required to appoint an auditor even if they are not required to conduct a full audit of their financial reports. This is a nonsensical and completely arbitrary piece of regulation that unnecessarily imposes a $4 million cost burden on business. We expect this change will largely benefit companies with a not-for-profit focus—for example, sports and recreations related organisations, community services organisations, education related institutions and religious organisations. This measure will ensure that these organisations can focus on providing services for the community rather than wasting money and time on needless red tape.

An additional measure is extending the Remuneration Tribunal's jurisdiction. This measure gives the Remuneration Tribunal the authority to set the remuneration of the chair and members of the Financial Reporting Council and the Auditing and Assurance Standards Board. The Remuneration Tribunal is an independent body that has specialist skills in reviewing and determining remuneration. This measure will bring the setting of remuneration of those office holders into line with the remuneration setting of public officers more broadly, and will improve the efficiency of government processes.

Finally, measures to improve the efficiency of the Takeovers Panel. This measure will allow Takeovers Panel members to perform panel functions while overseas. This removes an outdated procedure and reflects the reality that the vast majority of panel members are engaged in employment separate to their Takeovers Panel commitments, which can include a significant amount of overseas travel. This will likely have a positive impact on business through the more efficient resolution of applications being considered by the Takeovers Panel.

In conclusion, there are whole range of measures in this bill—some technical, some highly practical—but each of them goes some way to reducing the burden of regulation that keeps our economy from reaching its full potential. The government is committed to reducing these burdens and to building a strong economy. We want to build on the gains that we have seen: by removing thousands of pieces of regulation in the past; by getting rid of burdensome taxes, like the carbon tax and the mining tax; by freeing up hundreds of billions of dollars of growth through environmental approvals. This latest piece of legislation is simply another piece of the puzzle that will help to grow our economy and help to make it easier for businesses to thrive in this country. I commend this bill to the Senate.