Corporations (Commonwealth Powers) (Termination Day) Amendment Bill

Second Reading

The Hon. P. MALINAUSKAS (Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety) (20:43): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Corporations (Commonwealth Powers) Act 2001 refers, from the Parliament of South Australia to the Parliament of the Commonwealth, the following legislative powers:

the power to enact the Corporations Bill 2001 and the Australian Securities and Investments 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 the regulation of financial products or services.

The referrals of power are made pursuant to section 51(xxxvii) of the Constitution and, in conjunction with identical referrals from all other state Parliaments, form the constitutional basis for the national legislative scheme for the regulation of corporations and financial products and services ('the Corporations Scheme').

The Corporations Scheme commenced on 15 July 2001. It replaced the national scheme laws (based on the Commonwealth's administration of the States' and Northern Territory's 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 ('the Corporations Act') and the Australian Securities and Investments Commission Act 2001 ('the ASIC Act') (collectively referred to as the 'Corporations Legislation').

The Australian Securities and Investments Commission ('ASIC') administers the Corporations Legislation.

Unless terminated earlier, the referrals of power supporting the Corporations Scheme terminate on the 15^th anniversary of the day of the commencement of the Corporations Legislation (15 July 2016), having twice been extended for five year periods in 2005 and 2011.

Section 5(1) of the Corporations Act provides that the Corporations Legislation applies only to:

(a) referring States;

(b) the Capital Territory (including the coastal sea of the Jervis Bay Territory);

(c) the Northern Territory; and

(d) external Territories (but only in relation to some provisions).

Section 4(6) of the Corporations Act provides that a State ceases to be a referring State if the State's referrals of power terminate.

As the Corporations Scheme commenced on 15 July 2001, South Australia will cease to be a referring State on 15 July 2016 if the Parliament does not extend the referrals of power.

Unlike other states, whose referrals of power can be extended by proclamation, South Australia's referrals of power can only be extended by legislation.

This Bill, the Corporations (Commonwealth Powers) (Termination Day) Amendment Bill 2016, amends the Corporations (Commonwealth Powers) Act 2001 to extend the references of power for a further five years. The new expiry date will be the 20th anniversary of the commencement of Corporations (Commonwealth Powers) Act 2001, 15 July 2021.

The economy of South Australia would be harmed by the State ceasing to be a referring State. The extent to which the Corporations Legislation would continue to apply within South Australia would be uncertain. 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 will be the case in relation to any particular provision will depend upon several factors: whether the provision is intended to apply in a non-referring state and, if so, whether the Commonwealth has the constitutional power to legislate with respect to the subject matter of the provision. These factors 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 would be invalid to the extent they are inconsistent with a valid Commonwealth law. In any event, establishing and maintaining a local regulatory system would be prohibitively expensive.

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.

I commend the Bill to Members.

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) '15th' and replaces it with '20th', thereby delaying by 5 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 2021.

Debate adjourned on motion of Hon. J.S.L. Dawkins.