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Corporations Legislation Amendment (Deregulatory and Other Measures) Bill
I congratulate the member for Hindmarsh, who has done an outstanding job advocating for the interests of South Australia on our subcommittee which has been on the search for red tape reductions wherever we can find them. It is always important to put legislation into the broader context, and so I welcome the opportunity to speak on the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill. Since forming government the coalition has placed a high priority on identifying and repealing the burdensome and redundant regulations that have built up over time. Many former governments are guilty of allowing that to happen, and none are more guilty than the Rudd-Gillard-Rudd governments of 2007 to 2013. I remind the Labor Party that former PM Rudd committed to a policy of one in, one out when it came to regulations. But these were just empty words. More than 21,000 new regulations were introduced during the Labor Party’s six years in government. Businesses and individuals throughout the nation are bound up in red tape. In my own electorate of Deakin, the single biggest issue that small business owners speak to me about is the excruciating process of any interaction with government. That just got worse under the Labor Party. Our deregulatory agenda is changing this—slowly but methodically and surely. We are committed to helping lift up our nation by shedding the regulations that are holding us and our people back.
Assisting with this process, as foreshadowed by the member for Hindmarsh, was the coalition’s deregulatory task force, very ably led by my friend the Parliamentary Secretary to the Prime Minister and member for Kooyong. I did have the privilege of serving on this task force, giving me a unique insight into the varied ways that regulation has been stifling innovation and curbing productivity in our country. My remit was to get out there and find every piece of red tape we could repeal that had a unique Victorian aspect to it. I did that with vigour.
This government recognises that while some degree of regulation is always necessary, bad regulation and too much regulation hurts productivity, deters innovation and investment and ultimately costs jobs. We have adopted a whole-of-government approach to cutting red tape. We did commit before the election to reducing red tape by $1 billion each year. A dedicated regulation unit tasked with identifying these savings was set up in each major federal department—backing up our words with actions. This year, for the first time in history, we held two repeal days dedicated to repealing thousands of pieces of redundant legislation—and weren’t our two repeal days in 2014 an outstanding success.
So even before the Spring Repeal Day last month, the government had more than doubled our target and announced more than 400 measures with a net reduction of $2.1 billion in compliance costs. We have listened to the concerns of our nation, from small businesses to large corporations, from individuals to community groups, all to ensure that we achieve the ultimate goal of repealing red tape.
We are delivering practical relief from red tape across all industries and sectors of society, including in the not-for-profit space. We are reducing the government’s footprint and getting out of the way. We want to make it easier for businesses and individuals to focus their energies, ultimately, on what it is that adds to their bottom line and creates more jobs for our society.
The bill before us today, therefore, represents another step in that methodical process that I referred to earlier. The amendments in this bill collectively reduce compliance costs on business by around $14 million a year. The bill contains a range of common-sense measures that not only remove unnecessary regulation but also clarify existing regulatory obligations and enhance the efficiency of government, benefiting all.
In discussing these changes in more detail, I want to turn firstly to the amendments to the Corporations Act and, in particular, to a change that is very, very welcome in the business community—the abolition of the 100-member rule. Currently, directors of a company must hold a general meeting—at the company’s expense, of course—if requested to do so by 100 shareholders; the 100-member rule. While this rule may have made sense at some companies that are of smaller size, at larger corporations it is likely that 100 shareholders represent a very small percentage of the total shareholders. Frequently, in a large publicly listed company, that could be less than one per cent of the share capital of that company. At the same time, the resolutions proposed by the shareholders who at times call those meetings often receive very little support; but the cost of holding these general meetings is a burden on the company and ultimately reduces shareholders’ returns. A great example is that Woolworths was forced to call a general meeting a couple of years ago at the behest of 0.05 per cent of shareholders—or some 210 shareholders out of the total share register of 417,000. That special meeting cost Woolworths nearly $2 million.
The government is seeking to strike a better balance between the interests of minority shareholders and the shareholders as a whole. We are removing the ability of 100 shareholders with voting rights to call a general meeting and hence saving the business and shareholders from having to foot the bill for that potentially costly process. But we are not throwing the baby out with the bathwater: we are retaining key rights so that shareholders will still have their voices heard. The five per cent rule will continue so that shareholders with five per cent of voting rights can still call a general meeting, holding directors and the company to account for their decisions. Importantly, the rights of 100 shareholders to put forward resolutions for the agenda of a general meeting or circulate material to other shareholders still remain firmly in place.
It is estimated that business will save around $1½ million per annum in compliance costs as well. The government has consulted widely on this measure and other measures contained in this bill. It is important to note that the measure has broad support from industry stakeholders such as the Australian Institute of Company Directors, the Governance Institute of Australia and the Business Council of Australia as well as, importantly, shareholder groups such as the Australian Shareholders’ Association.
This bill also contains a range of other meaningful amendments to the Corporations Act. Remuneration reporting requirements are improved, saving around $8½ million in compliance costs. The government recognises that unlisted companies should not have to prepare a remuneration report. Quite simply, in those situations a remuneration report is not relevant. Unlike the situation with listed companies, the report does not have to be adopted by shareholders and therefore is not subject to the two-strikes test which can lead to a spill of the board if the report is rejected in those particular circumstances. Once again, we are doing away with paperwork that is superfluous but costly.
The bill also clarifies some confusion in the existing law around when entities, including companies, can change their end-of-year date. One measure that particularly pleases me is that the bill removes some nonsensical requirements with respect to auditors. Currently, the law requires certain companies limited by guarantee to appoint an auditor, even though they are not required to undertake an audit. That is a completely bizarre feature of the current law.
As we remove this requirement, we will also remove a $4 million compliance cost burden on business. Importantly, this change will predominantly benefit companies with a not-for-profit focus, as I foreshadowed earlier, freeing them up to concentrate on what they do best. If they are not required to conduct an audit, they will not be required to appoint an auditor. Many sports and recreation organisations, community service organisations, education related institutions and religious institutions around the country, including in my electorate of Deakin, have already welcomed this change in advice to me.
Let me briefly now turn to the amendments to the Australian Securities and Investments Commission Act, which are contained in schedule 2 of the bill. These amendments seek to improve the efficiency of government, because, just as we endeavour to help business become more efficient and productive by removing red tape, we must also look at government’s processes through the same prism. ASIC is no different.
We are also improving the efficiency of the operation of the Takeovers Panel. The panel’s operations are currently being hindered by the requirement—quite a bizarre requirement—that the panel can only operate if members are physically located in Australia. Obviously, members are appointed from the private sector and hold senior positions in banks, law firms and large corporations. As you can imagine, these people are frequently required to travel overseas for work, preventing them from fulfilling their panel obligations even though modern technology would allow them to do so. With this bill, we are removing the geographical restriction on the panel’s existing powers, so that members can continue to carry out their important role in helping to resolve disputes over takeover bids.
Finally, the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill gives the Remuneration Tribunal additional remuneration-setting responsibilities. We all know that the tribunal is an independent body skilled in reviewing and determining remuneration. It will improve administrative efficiency and ensure greater consistency if the tribunal is given the power to review and set remuneration for the chairs and members of several boards that currently fall under the jurisdiction of the minister and the Financial Reporting Council—a good streamlining exercise.
The bill before us today is yet another example of our commitment to charting a new deregulatory course in this country . We are committed to a new approach ; one where we ask first, what is the purpose, the cost and the impact of the proposed initiatives, before we haphazardly regulate—in stark contrast to the Rudd-Gillard-Rudd governments. Everyone in the government , from the Prime Minister and the cabinet down, is constantly asking : d o we need this piece of legislation; do we need this regulation? We ask it incessantly, and our approach is working. As Jennifer Westacott, CEO of the Business Council of Australia, put it: ‘ Finally, we ha ve reached a turning point in dealing with the high costs and inefficiencies faced by business and consumers every day. ‘ As I said earlier, we have now delivered more than $2.1 billion in red tape savings , and the scissors are still out. The benefits are being felt right across the community, and we are asking the community to help us to continue to deliver red tape relief.
The b ill before us today represents another incremental movement— $14 million a year in savings — but we are still searching for more , and the Australian people can play their part . In fact, many of the ideas to cut red tape which are in this bill today came from members of the community. The repeal of red tape in this country is a big challenge, but we have risen to that challenge. We have more than doubled our red tape reduction target, and we will not let up . All the small savings that we can find do add up .
I thank you, Mr Acting Deputy Speaker, for the opportunity to speak in support of the saving s and efficiency measures in the is bill before us today. I commend the bill to the House.