Corporations (Commonwealth Powers) (Termination Day) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (15:45): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the detailed explanation of clauses inserted in Hansard without my reading them.

Leave granted.

Mr President, 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:

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 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.

Mr President, unless terminated earlier, the state referrals of power supporting the Corporations Scheme will terminate on the twentieth anniversary of the day of the commencement of the Corporations Legislation (i.e. 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 referrals of power terminate.

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

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, State and Territory Ministers of the Legislative Governance Forum on Corporations.

Extending the referrals for a further 10 years 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.

Mr President, the economy of South Australia would be significantly harmed 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:

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 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.

Mr President, 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.

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.

The Hon. K.J. MAHER (Leader of the Opposition) (15:45): I rise to indicate that we will be supporting this bill. We have been briefed on this bill. The nature and the effect of the bill is to continue the referral of powers to regulate corporations that all jurisdictions have handed over to the commonwealth over the last 20 years and that have been extended on five-year periods over that 20-year period. As we understand it, most other jurisdictions do this by regulation, but South Australia, sensibly, lets the parliament decide these things, so we are here with legislation to extend it for a 10-year period.

There would be grave consequences indeed if we did not pass this bill. We would have to set up all the regulatory functions that the commonwealth has for corporations. I do have a question that I would like the Treasurer to address. We are seeing this bill here in June. As I understand it, it needs to be passed by the end of the financial year.

Why is it that the government has waited until the last five minutes to progress this bill if it is the case that it has to be passed by the end of the financial year? Why, for instance, did the government not introduce the bill in February or March or April to give us more time to look at it? What is the reason that they did not know about this and it suddenly crept up upon them, so that we are faced with the situation of passing a bill at the same time it is introduced in this house?

I am just wondering what the emergency is that has occurred. Was this something that the government intended to do, to give us so little time to consider it? Was it something that the government overlooked, that they made a mistake and there was a great error somewhere? I am just interested. We are not going to hold it up and we are not going to not support the bill, but we would be very interested to know why we are being put in this position.

The Hon. R.I. LUCAS (Treasurer) (15:48): If it is anything different, I will undertake on behalf of the Attorney-General to have her write a letter to the Leader of the Opposition, but I suspect the answer is it was just so self-evident that, for the reasons outlined by the honourable Leader of the Opposition, there is no alternative course in relation to this, that is, no alternative government is actually going to seriously argue about doing the sorts of things in the alternative that the Leader of the Opposition briefly referred to—that is, establishing a whole replica structure again in South Australia—that the actual timing of the bill, as long as it was done before 30 June, was not a significant issue.

I do not think there was anything Machiavellian in it other than that, but if there was something Machiavellian in it, or if there was something else in it that I have not been able to enunciate on behalf of the Attorney and the government, I undertake to have the Attorney write to the Leader of the Opposition and provide further detail as to what other reasons there might have been.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. K.J. MAHER: I want to expand a little bit more on the second reading contribution. I do understand the Treasurer's contribution that there is nothing sinister or Machiavellian in the fact that we are passing a bill in this chamber on the same day as it is received in this chamber. I want to ask: does the Treasurer think that is good practice in general to be doing that?

The Hon. R.I. LUCAS: The answer is no. It was not my intention. It was not on the list of priorities for this week; however, I was advised by the Attorney-General's office that when Attorney-General officers consulted with both the opposition and crossbenchers, the view was expressed during those discussions that there was no opposition and they were quite happy to process the bill today.

If there is any concern at all, as I indicated to one or two of the crossbenchers, I have no concerns at all in delaying this until the next sitting week. If the Leader of the Opposition has any concerns, I am happy to report progress and have the bill delayed until the next sitting week. So the answer is, no, it was never my intention to process this today, but for some reason discussions between the Attorney-General's office and opposition and crossbenchers indicated there was agreement for this to be put through today and for me to move contingent notice of motion No. 1, which is not usual practice. I will be even more cautious than I normally am when these sorts of propositions are put to me.

If the Leader of the Opposition has a concern, I am quite happy to agree with the fact that it is not standard practice and it is not good practice, but for the reasons that have been outlined to me, I was happy to concur. I assured myself by speaking to the crossbenchers and others that they in fact had indicated that was their position and that is the only reason I actually proceeded with it. Again, if the leader has any concerns, I will report progress and we can consider it in the next sitting week.

The Hon. K.J. MAHER: I thank the Treasurer for his further contribution and note that we do not have concerns. We would place on the public record once again that it is running right up to the end of the financial year and I mentioned—and I think we are in furious agreement—that there would be grave consequences if this was not passed by the end of the financial year. I would invite the Treasurer to maybe take it back to his cabinet colleagues that maybe more time is necessary so we are not running into that last month before something has to be done. But, no, we do not propose to hold it up and we do see the need to make sure this is passed to give businesses in South Australia the certainty that is required and desired.

The Hon. C. BONAROS: I want to confirm for the record that I was one of those crossbenchers who did have that discussion with the Attorney's office and indeed I did have the same discussion with the Treasurer here in the chamber and indicated that we were happy to deal with this bill today, just to make it clear. I think I am not alone, but we did have that discussion with the Attorney's office and I had the discussion personally with the Treasurer today and did indicate that we did not have any issues and saw the importance of this issue.

I think we are talking a little bit at cross-purposes. I think the Leader of the Opposition is asking about the timing of it being introduced, rather than whether or not we are willing to deal with it today, so I thought I would like to place that on the record.

Clause passed.

Remaining clauses (2 and 3) and title passed.

Bill reported without amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (15:54): I move:

That this bill be now read a third time.

Bill read a third time and passed.