Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

I move opposition amendment (1) on sheet 5233:

(1)    Schedule 1, item 4, page 4 (line 9), omit “having regard to”, substitute “because they are inconsistent with or contrary to”.

This is an amendment which deals with the issue I raised in my speech during the second reading stage. We seek to pick up the proposal of the Law Council which is intended to more clearly circumscribe the jurisdiction of the panel. I understand that Senator Murray, in his second reading contribution, sought that the government table its advice about the appropriateness or otherwise of this amendment. I ask if the parliamentary secretary is intending to do so.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

No, that is not the government’s intention.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Perhaps the government could clarify what its concerns are in relation to the amendment.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

The government’s perspective in relation to this is that the Takeovers Panel was established to take takeover cases away from the courts. Indeed, there need to be broad powers for experts to decide commercial issues based on broad principles and on what they consider unacceptable. In fact the PJC agreed that the panel should have broad based powers to act without constant concerns about jurisdictional challenges, and I note that Senator Murray commented on that in his contribution. The very aim of the legislation that we have before us is to give the panel a wide power to act so that it can make commercial decisions which give effect to the spirit and the purposes of the act.

The formulation in the bill that the panel can do certain things, having regard to the purpose of the takeovers law, gives a broad jurisdiction to the panel. The proposed opposition amendment narrows that formulation, because the circumstances would need to be inconsistent with or contrary to the takeovers law. This is a narrow jurisdiction. It would lead to, in the government’s view, constant uncertainty, as it invites parties to argue that the panel has not demonstrated something as definitively contrary to or inconsistent with the purposes of the law. For example, you could say circumstances were contrary to only one of the four purposes set down in the takeovers law and therefore not contrary to the purposes overall. Persons might therefore see it as worth their while to challenge whether the panel has satisfied the negative test in order to slow down a bid for months until the court gives its decision.

A plethora of tactical litigation is exactly what was happening before the panel was constituted in 2000 and is what the government is seeking to guard against as part of this legislation. In light of the constant threat of challenge to the panel’s powers that would exist under the opposition’s proposed amendment, the panel would become very reluctant in the government’s view to intervene in all but the clearest cases, leaving the market with no option but to go to court on any takeovers matter.

Question negatived.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I move Democrat amendment (1) on sheet 5234:

(1)   Page 3 (after line 8), after item 1, insert:

1A  After Division 8 of Part 2M.3

Insert:

Division 8A—Disclosure by companies of political donations

323DB  Object of Division

                 The object of this Division is to authorise gifts and other political donations as defined in the Commonwealth Electoral Act 1918 and in this Division, made by companies to political organisations.

323DC  Prohibition of gifts and political donations by companies

        (1)    It is unlawful for a gift or other political donation as defined in this section to be made by a company to a political organisation or a candidate except as authorised by this Division.

        (2)    In this Division:

candidate means a candidate for election to the Commonwealth Parliament, a State Parliament or for a position in a registered organisation as defined in the Workplace Relations Act 1996.

political donation means:

             (a)    a gift as defined by the Commonwealth Electoral Act 1918; or

             (b)    a disposition of property as defined by the Commonwealth Electoral Act 1918.

political organisation means a registered political party or an associated entity as defined by the Commonwealth Electoral Act 1918.

relevant time, in relation to any political donation made by a company, means:

             (a)    the time when the donation is made; or

             (b)    the time, if earlier, when any contract or undertaking is entered into by a company in pursuance of which the political donation is made.

323DD  Approval of gifts and political donations by companies

        (1)    It is unlawful for a company or an officer of a company to make any political donation to a political organisation or candidate unless:

             (a)    the political donation is authorised by a resolution passed at a general meeting by a majority of shareholders of the company before the relevant time; or

             (b)    the political donation is made on the authority of the company, board or management body in accordance with a donation policy which has been approved by a general meeting of the company before the relevant time.

                 Penalty:

                  (a)    in the case of an individual—by a fine not exceeding 2000 penalty units; or

                  (b)    in the case of a body corporate—by a fine not exceeding 10,000 penalty units.

        (2)    For the purposes of this section, an approval resolution is a qualifying resolution which specifically authorises the company to make donations to nominated political organisations not exceeding in total a sum specified in the resolution, during the requisite period beginning with the date of the resolution and concluding at the expiration of 3 years after the date of the resolution, after which a further resolution is required in accordance with paragraph (1)(a).

        (3)    In this section:

qualifying resolution means an ordinary resolution or, if the directors so determine or the articles so require:

                  (a)    a special resolution; or

                  (b)    a resolution passed by any percentage of the members greater than that required for an ordinary resolution.

requisite period means three years or such shorter period as the directors may determine or the articles may require.

        (4)    The directors may make a determination in relation to a qualifying resolution or the requisite period unless any provision of the articles of the company operates to prevent them from doing so.

        (5)    An approval resolution must be expressed in specific terms which conform with subsection (2).

        (6)    If a company or an officer of a company makes any donation in contravention of subsection (1), no ratification or other approval made or given by the company or its members after the relevant time is capable of operating to nullify that contravention.

        (7)    For the purposes of this section, company includes a subsidiary of a company.

I seek leave to table the accompanying supplementary explanatory memorandum.

Leave granted.

The amendment I have moved is opportunistic. On Friday, 23 March 2007—a week ago—the Minister for Employment and Workplace Relations was reported as telling journalists outside the Australian Mines and Metals Association conference in my home town of Perth:

[Unions] of course don’t have the same accountability [as corporates] - they don’t disclose how much union executives are being paid, they don’t go to members and ask them whether they can contribute millions of dollars to the Labor Party.

They don’t have the same disclosure arrangements as corporate Australia. They don’t have the same fiduciary obligations to act in the best interests of the company - or the union movement - as corporate Australia, and that’s something that I think needs to be addressed.

This statement leads me to conclude that there is now acceptance in the government of reform in this governance area. The Corporations Amendment (Takeovers) Bill 2007 is the earliest legislative corporate law vehicle available to effect such reform. And of course it is opportunistic, because with the election due any time from 4 August I need to address these issues as soon as I can.

The minister seems unaware that corporates do not have to gain shareholder approval for political donations and that most do not. I have raised this issue several times since 1996. I drew attention to this matter in my minority report to the Joint Standing Committee on Corporations and Financial Services May 2004 report into CLERP 9. I subsequently unsuccessfully moved an amendment reflecting my recommendation to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2003. I have again drawn attention to the need for disclosure by companies making political donations without shareholder approval and unions making political donations without member approval and suggested the remedies for this. Note my supplementary remarks to the September 2005 report of the inquiry by the Joint Standing Committee on Electoral Matters into the conduct of the 2004 federal election and matters relating thereto.

The amendment, which is a fairly lengthy one, provides for the prohibition of gifts and political donations by companies unless the political donation is authorised by a resolution passed at a general meeting by a majority of shareholders of the company or unless the political donation is made in accordance with a shareholder-approved donation policy. It does not seek to prohibit donations; it seeks to require that the shareholders approve the policy under which donations are made.

I referred earlier to my supplementary remarks to the September 2005 report of the inquiry by the Joint Standing Committee on Electoral Matters into the conduct of the 2004 federal election. I said the following, which is the Democrats’ approach to these matters:

The practice of companies making political donations without shareholder approval and without disclosing donations in annual reports must end. So must the practice of unions making political donations without member approval. It is neither democratic nor is it ethical. Shareholders of companies and members of registered organisations (or any other organisational body such as mutuals) should be given the right either to approve a political donations policy, to be carried out by the board or management body, or the right to approve political donations proposals at the annual general meeting. This will require amendments to the relevant acts ...

I think this position is clearly understood. If I were to take parliamentarians and ask them to put on their personal moral and ethical hats, I have no doubt they would support my remarks. But when you come across parliamentarians in their guise as representing political parties, of course it is not in their self-interest to support them, so I am anticipating the rejection of this amendment.

In closing on my motivation for the amendment, I do want to remind the committee that in the report of the Joint Standing Committee on Corporations and Financial Services, which assessed that original CLERP 9 legislation, recommendation 26 said the following:

The Committee recommends that provisions be inserted in the Corporations Act that would require the annual report of listed companies to include a discussion of the board’s policy on making political donations.

To this date, of course, the government has not taken up that committee recommendation. That is not unusual: the government does not take up lots of recommendations of that particular committee. In my opinion it should take up more. I do not think there is much more to say from my point of view.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

I congratulate Senator Murray on his foresight. We will not be supporting his amendment. The government does not support intervening in the operations of individual companies in the way proposed by Senator Murray. The government notes that Australia’s Corporations Law is principles based and allows a broad discretion to act in the best interests of the company and its shareholders. In making these sorts of decisions, companies must take due care and diligence and all reasonable factors into account, and it is not for the government to dictate to companies how they do that. The government does not support the amendment proposed by the Democrats.

Question negatived.

Bill agreed to.

Bill reported without amendment; report adopted.