Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

In respect of the Parliamentary Joint Committee on Corporations and Financial Services report Litigation funding and the regulation of the class action industry, dated December 2020, which was received out of sitting on 21 December last year, I move:

That the Senate take note of the report.

I will only make a short contribution. I just want to say at the outset that this matters because this really goes to the heart of Australians' access to justice, which has been increased by the emergence of litigation-funding entities that are making it possible for people like those in the seat of Meryl Swanson, the member for Paterson—the great Labor advocate for that community, who was fighting for her community against this government for years and years and years—to try and get redress for the spill of PFAS, which Australians might be familiar with. It is the spray that was used when firefighting practice occurred, and it has a toxic impact on the environment.

That community that Meryl inherited was stranded. People's lives were completely on hold. They were unable to get any resolution of the fact that they were living on properties in a declared red zone, and the government was not willing to provide any compensation or any relief from the situation in which they found themselves and give them the opportunity to move on. That was the reality. Litigation funding enabled them to bring a very complex case to court against the government—their own government that was ignoring them. It's a perfect example of how, where there is a lot of money and a lot of power—not just in governments, but in big corporations—the ordinary citizen, the hardworking Australian who has been minding their business, minding their Ps and Qs all their life, finds themselves on the wrong side of a big, big legal battle and there's no way that it can get to court unless there's litigation funding.

That's really what is at the heart of this matter. But the government really botched this in what they did, and in botching it they revealed how subject they are to influence by outside entities, including the US Chamber of Commerce, who were significant lobbyists in gathering a storm of action against what I would consider would be a good outcome from this inquiry. Instead, we've ended up with the mess that is reported in this report.

So, I am rising to speak, obviously, against some of the recommendations contained in the report, and I want to reiterate the glaring failures in the government's action on litigation funders that our committee inquiry uncovered. The report was particularly galling in that it unfortunately recommends actions that the government had already decided to take before they even received this report. The sequence was bizarre. It was the institution of this committee to make an inquiry. Eight days after that, Minister Frydenberg stood up and made declarations that are, incidentally, tied to the recommendations that didn't arrive in this place until the end of the year. Why set up a committee of inquiry when eight days later you're going to go out and make an announcement for changes?

It goes to the heart of some of the chaotic decision-making and the capture of this government by big lobbyists that make it do things that are not in the public interest. Despite referring this inquiry into the litigation industry last May, Treasurer introduced regulations anyway, pre-empting the report of his own government, a mere eight days afterwards. That's why I supported the disallowance motion of the regulations in this chamber last year. It was in the final week of the sittings. And I'm quite sad that Senator Hanson, who did pay some attention to this matter, and Senator Roberts as well, didn't support that disallowance motion, because the government now seem to have been let off the hook, to continue on their merry way, and I expect they will continue to suppress Australians' access to litigation funding—because that's the outcome of what they've done.

Everything we've seen since the disallowance not being carried in this place has shown us that the regulations introduced by Mr Frydenberg are not fit for purpose. Even the regulator ASIC, the government body charged with enforcing these regulations, was forced to spend tens of thousands of dollars in legal advice to figure out how to implement the regulations that were hastily brought in. It's a ridiculous proposition to require a litigation funder to operate as a managed investment scheme. This has been recognised by a blindsided ASIC, by opposition members of the committee, by most parties of the Senate and by the majority of the industry. Everybody figured it out, except for the government. This is an example of Minister Frydenberg's omnishambles—policy made on the run, dreamed up by foreign lobbyists and think tanks that have no application in reality.

The reforms this government are putting forward and seeking to implement, or in some cases have implemented, in line with the recommendations in the report, are wrong, and they are certainly not fit for purpose. They ignore the recommendations of the Australian Law Reform Commission, which is a report that the government asked for two years prior to calling on the Senate to do the inquiry and two years and eight days before Mr Frydenberg stood up and made up the rules, off the cuff. And it ignores the 24 recommendations that were made for 18 months before Mr Frydenberg began his current jeremiad against litigation funders.

As we point out in the minority report, the new regulations are not merely difficult for the funders to comply with; they're impossible to comply with. The managed investment scheme rules require that a registered scheme be set up and require the maintenance of a register of members and the convening of member meetings, which is just an absurd prospect in a class action where potentially tens of thousands of members are affected. So it's another barrier to justice. It's another paper wall established by this government to make it harder for people to get the services they need and to get the professional assistance they need to bring legitimate and just causes to the courts for consideration and resolution.

Make no mistake: these regulations that the government have locked in are a sellout to foreign corporates, and they will—and history will no doubt prove this—indeed hinder access to justice for ordinary Australians. The evidence heard by the committee from litigation funding participants, from law firms and from experts in the field all pointed out that there was no real crisis at all in class actions and that litigation funders were an important tool for many working-class Australians in getting access to justice. Those working-class Australians are now liable for lawsuits from Commonwealth agencies and other private parties, should the funder breach those member register obligations. We've seen this before, in other underhanded, sneaky ways that the government has established process impediments in the area of unions.

What the government is proposing to do is wrong. It creates a giant stick to threaten litigation funders. It threatens with terrible legal consequences those who would dare to take class actions to court, unless their funder fulfils these arcane and unfit regulations of an MIS. I was very disappointed to see the disallowance motion voted down at the end of last year, because it would have forced the government back to the drawing board and encouraged them to come up with a regulation which was fit for purpose and which preserved access to justice for ordinary Australians. I know that Senator Hanson, in return for her vote and Senator Roberts's vote against the disallowance of these regulations, has a commitment from the government to support reforms to exempt funders from the MIS regulations if they commit to giving class members 70 per cent of the damages. That is what she says is the deal she got. My concern is that it has to be delivered to be real. I note that this reform is yet to reach the Notice Paper, and I strongly urge Senator Hanson to keep the government's feet to the fire, because these guys run a mile from the commitments they make. They are disingenuous. They lie to the public with daily regularity. This matter needs resolution. Australians deserve access to justice, and their government shouldn't get away with putting a wall between them and access to justice.

There are some excellent recommendations in the report, and I urge the government to keep reforming the industry but in a manner that was outlined by the Australian Law Reform Commission—not made up by Minister Frydenberg as he stood up eight days after he called the inquiry. The government cannot let this issue lie. It's got to fix the broken regulatory requirements for litigation funders to save taxpayers money on extra legal advice and to protect class actions.

Debate adjourned.