Corporations (Commonwealth Powers) (Termination Day) Amendment Bill

Introduction and First Reading

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General, Minister for Planning and Local Government) (16:26): Obtained leave and introduced a bill for an act to amend the Corporations (Commonwealth Powers) Act 2001. Read a first time.

Second Reading

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General, Minister for Planning and Local Government) (16:26): I move:

That this bill be now read a second time.

I am pleased to introduce the Corporations (Commonwealth Powers) (Termination Day) Amendment Bill 2021. The bill amends the Corporations (Commonwealth Powers) Act 2001 to extend the referrals of power contained in that act for a further 10 years to ensure the continued operation of the Corporations Scheme in South Australia.

As some may know, the Corporations (Commonwealth Powers) Act 2001 refers from the Parliament of South Australia to the Parliament of the Commonwealth two things:

the power to enact the Corporations Bill 2001 and the Australian Securities and Investment Commission Bill 2001 as laws of the commonwealth extending to each referring state; and

the power to make express amendments to those acts that are amendments about forming corporations, corporate regulation or regulation of financial products or services. The referrals of power are made pursuant to section 51(xxxvii) of the Australian Constitution, and, in conjunction with identical referrals from all other state parliaments, form the constitutional basis for national legislative scheme for the regulation of corporation and financial products and services, which I will hereafter refer to as the Corporations Scheme.

This scheme commenced on 15 July 2021. It replaced the national scheme laws (based on the Commonwealth's administration of the states' and Northern Territory Corporations Law), the constitutional certainty of which was undermined by the Wakim and Hughes decisions of the High Court. The Corporations Scheme operates as follows:

All states, including South Australia, have enacted referral legislation in accordance with section 51(xxxvii) of the Constitution, referring the relevant power to the commonwealth parliament.

In reliance upon the referrals of power, the commonwealth has enacted the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, which are collectively referred to as the corporations legislation.

The Australian Securities and Investments Commission (ASIC) administers the corporations legislation.

Unless terminated earlier, the state referrals of power supporting the Corporations Scheme will terminate on 20^th anniversary of the day of commencement of the corporations legislation, namely 15 July 2021, having already been extended for a further five-year period on three previous occasions in 2005, 2011 and 2016 respectively.

Section 5(1) of the Corporations Act provides that the corporations legislation applies only to those states who have referred power to the commonwealth. Section 4(6) of the Corporations Act provides that a state ceases to be a referring state if the state's referral of powers terminate.

Unlike other states, whose referrals can be extended by proclamation, South Australia's referrals of power can only be extended by legislation, and long may that be the case. Accordingly, this bill amends the Corporations (Commonwealth Powers) Act 2001 to extend the referrals of power for a further 10-year period, following consultation with the commonwealth and state and territory ministers of the Legislative Governance Forum on Corporations.

Extending the referrals for a 10-year period will ensure that South Australia can continue to fully participate in the Corporations Scheme until 15 July 2031. This will deliver a positive benefit for the state by providing greater certainty and confidence to South Australian companies and businesses about their rights and obligations under the corporations scheme.

In the event that the Parliament of South Australia does not extend the referrals of power contained in the Corporations (Commonwealth Powers) Act 2001, South Australia will cease to be a referring state. The economy of South Australia would be significantly harmed as a state should it cease to be a referring state. The extent to which the corporations legislation would continue to apply in South Australia would be uncertain.

However, it is likely that there would be little to no corporate regulation in South Australia. Section 5 of the Corporations Act provides that, while the provision of the act can apply to entities, acts and omissions outside of referring states, whether this would be the case in relation to any particular provision would depend upon several factors, such as (1) whether the provision is intended to apply in a non-referring state; and, if so (2) whether the commonwealth has the constitutional power to legislate with respect to the subject matter of the provision.

These provisions can only be determined on a provision-by-provision basis. This uncertainty would also undermine any attempt by the state to establish its own system of corporate and financial regulation, as any South Australian laws that are found to be inconsistent with a valid law of the commonwealth would be invalid to the extent that they are inconsistent.

In any event, establishing and maintaining a separate local regulatory system is likely to be prohibitively expensive. Furthermore, there would be no guarantee that companies registered under a South Australian system would be able to participate in the national scheme on an equal footing with companies registered in referring states.

For South Australia to participate fully in the national economy, it must remain part of the Corporations Scheme. To do this, it must continue to be a referring state. Accordingly, I commend the bill to all members, and I seek leave to insert the explanation of clauses (of which, there are only three) into Hansard without my reading it.

Leave granted.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

Part 2—Amendment of Corporations (Commonwealth Powers) Act 2001

3—Amendment of section 5—Termination of references

This clause deletes from current section 5(1) '20th' and replaces it with '30th', thereby delaying by 10 years the termination of the references of matters to the Parliament of the Commonwealth under the principal Act. Following this amendment, the references are due to expire on 15 July 2031.

Debate adjourned on motion of Hon. Z.L. Bettison.