1998-05-293817SENATE344301998-05-29The PRESIDENT(Senator the Hon. Margaret Reid) took the chair at 9.30 a.m., and read prayers.Miscellaneous34433443The PRESIDENTThe PRESIDENT10000PON/A10—The Senate will be aware that a parliamentary delegation from Pakistan has been visiting Australia. We welcomed them to the Senate chamber on Wednesday, 27 May 1998. In consequence of the detonation of nuclear devices by Pakistan, I have directed that all further appointments for the delegation be cancelled and that they be asked to leave Australia as soon as practicable.Miscellaneous344334433443The PRESIDENTThe PRESIDENT10000PON/A10—I remind senators that legislation committees will be considering the budget estimates over the next two weeks. A committee order of business showing the final schedule of committee hearings and the timetable for the consideration of portfolio programs will be distributed this morning.Senators should note that I have been advised that next week Hansard will have significant additional workloads in connection with Senate legislation committees and other committees, as well as the House of Representatives, and this may result in delays in the production of the transcript of evidence of committee hearings. The priorities have been discussed and it has been agreed that they will be: chamber reports, main committee and estimates committees and then other committees. I incorporate in Hansard the memorandum that I have received from the Secretary to the Department of the Parliament Reporting Staff that sets out some more details of their difficulties.The memorandum read as follows—Madam PresidentMr Speaker(for information) This Minute provides advice on Hansard workload for the weeks of 1 to 5 June and 9 to 12 June.Background2. Most sitting weeks involve Hansard transcribing up to 130 hours of chamber and committee material. The two Houses sit for up to 80 hours, the Main Committee of the House of Representative sits for approximately 6.5 hours and there is generally around 30 to 40 hours of other committee hearings.3. The week of 1 to 5 June will, on present indications, generate more than 260 hours of material for transcription, double the `normal' workload.Issues4. The substantial extra workload is a significant problem which has been greatly exacerbated by, in the case of the House and the Main Committee, very short notice of the additional sitting hours.5. Hansard will use its resources, including overtime and external providers, to produce chamber reports and committee transcripts within the nominated turnaround times. However, it appears inevitable there will be delays in committee transcript production in the week of 1 to 5 June. This almost certainly will have implications for production of committee transcripts in the week of 9-12 June, which while not a House sitting week, is very heavily booked for legislation committee and other committee hearings.6. Hansard has discussed the situation with the Senate Clerk Assistant (Committees) and the House of Representatives Acting Assistant Secretary, Committees, and sought their assistance to set priorities and coordinate the order in which transcripts are produced.7. The priorities will be: Chamber reports Main Committee and Estimate committees Other committees8. I recommend that you note this Minute.signedJ.W. TempletonSecretary28 May 1998NOTEDSpeaker of the House President of the Senateof RepresentativesMiscellaneous344310000PRESIDENTThe PRESIDENT—Pursuant to standing order 12, I lay on the table a warrant revoking my previous warrant nominating Senator MacGibbon to be a temporary chairman of committees when the Deputy President and Chairman of Committees is absent.Bills3444r45734443444Calvert, Sen PaulSenator CALVERT5F4TASLP10—On behalf of Senator Knowles, I present the report of the Community Affairs Legislation Committee on the provisions of the Health Legislation Amendment (Health Care Agreements) Bill 1998 , together with submissions and transcript of the proceedings.Ordered that the report be printed.Bills3444r503Billsr492Billsr510Billsr5123444Bills received from the House of Representatives.3444Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I indicate to the Senate that those bills which have just been announced are being introduced together. After debate on the motion for the second reading has been adjourned, I will be moving a motion to have one of the bills listed separately on the Notice Paper . I move:That these bills may proceed without formalities, may be taken together and be now read a first time.Question resolved in the affirmative.Bills read a first time.344409:34:003444Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I move:That these bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard .Leave granted.The speeches read as follows—NATIONAL MEASUREMENT AMENDMENT BILL 1998The National Measurement Acts 1960 provides the legislative basis for the Australian national measurement system. The objective of this act is to ensure that measurements are made on a consistent basis throughout the nation and are compatible with measurements in other countries.The act was amended previously to provide for the introduction of certified measuring instruments used for regulatory purposes, such as police measurements of speed, and occupational health and safety measurements. At the same time provision was made for the use of certified reference materials to provide for improved chemical measurements in a wide range of applications in industry and government regulation such as police breath alcohol measurements and environmental monitoring.However these previous amendments have been frustrated by a drafting error in the definition of a "certifying body" which meant that certifying bodies for both certified measuring instruments and certified reference materials could be created under the National Measurement Regulations, but existing capable bodies could not be appointed.The purpose of the bill is to amend the National Measurement Act 1960 to correct this drafting error and-thereby allow the appointment of certifying bodies by the National Standards Commission both for the certification of certified measuring instruments and for the certification of certified reference materials.A second purpose of this bill is to remove the mandatory retirement age of 65 years for the Executive Director of the National Standards Commission in line with government policy. This will allow the Commission greater flexibility in succession planning.I commend the bill to the Senate.PAYMENT SYSTEMS AND NETTING BILL 1998Overview of the billThe common law has long recognised the principle of set-off between an insolvent company and its creditors. Where a company is insolvent there would be an injustice if the law allowed the liquidator to insist upon receiving 100 cents in the dollar on the whole of a debt due to the company, while insisting that the creditor must be satisfied with less than 100 cents in the dollar in relation to a debt owed by the company to the creditor. To address this, the law has allowed liquidators and creditors to set-off the debts, so that only the net amount becomes payable or provable, as the case may be, in the liquidation. This important principle has been taken up into section 553C of the Corporations Law.However, the common law in this area has not kept pace with technology. Improved communications technology and computers have made it possible for large institutions to enter into many transactions in the course of a day, and to be able to identify precisely the time each day each transaction was entered into.Taking advantage of this technology, the major financial institutions have many dealings each day with each other and their customers, usually for very large sums of money. Further, instead of paying each other the gross amount owing on each of these transactions, the parties have agreed to set-off the debts owed to each other at the end of each day. As there are several participants in the system, the parties commonly agree to a form of multiparty set-off, known as multilateral netting.Multilateral netting has three significant advantages for the parties. First, because only the net amounts are actually paid, it reduces their liquidity requirements. Second, an institution does not have to wait until it receives funds from one transaction before entering into another transaction. Third, there is a reduction in risk should one of the other parties become insolvent, because only the net amount is at risk, rather than the gross amount owed to the insolvent party.However, because the common law has only recognised set-off between two parties, there is some doubt about the effectiveness of multilateral netting on the insolvency of one of the parties. The bill will overcome that uncertainty.In particular, the bill will provide legal certainty for multilateral netting currently undertaken in the Australia payment system overseen by the Reserve Bank. This will enhance the stability of the Australian financial system. The bill will also provide certainty for netting undertaken in connection with the trading of derivatives, known as close-out netting, and for netting undertaken in accordance with the rules of a stock or future exchange or an associated clearing house, known as market netting.In addition, the bill will provide legal certainty for transactions undertaken through the real time gross settlement system to be implemented by the Reserve Bank at around mid 1998.These measures will enhance the integrity of the Australian payment system and the international competitiveness of Australian financial institutions. They will make a significant contribution towards the Government's commitment to establishing Australia as a major regional financial centre, and bring to Australia new business and employment opportunities in the financial sector.Integrity of netting in the payment systemThe Australian payment system currently comprises a number of separate systems for transferring funds in Australia between banks, other financial institutions and their customers. The multilateral netting system currently operating in the payment system produces a result reflecting a participant's overall debit or credit position vis-a-vis all the other participants. The system sums the exposures of each participant in the system and calculates a multilateral net position at the end of the day for each participant.In the present framework of banking and insolvency law some uncertainties attach to the effectiveness of these multilateral netting arrangements. These uncertainties focus on the application of the law concerning unfair preferences in relation to multilateral netting arrangements. While insolvency law confers a statutory right of set-off in certain circumstances, there is some uncertainty about whether multilateral netting arrangements are enforceable in an insolvency. The bill will ensure that multilateral netting arrangements in the payment system that are approved by the Reserve Bank will survive the insolvency of a participant in the arrangement.Integrity of the real time gross settlement systemThe Wallis Report recommended that the Reserve Bank give high priority to promoting cost-effective control of domestic and international settlement risks.The Reserve Bank, the Australian Payments Clearing Association Limited (APCA) and the major national banks have participated actively in the establishment of a sound framework to support enhanced clearing and settlement systems in the payment system. As part of this process, high-value payments (which account for more than two-thirds of the value of cleared payments in Australia) are to be settled on a real time gross settlement basis.Under real time gross settlement, the processing of payments will only occur if the paying institution has funds available in its settlement account with the Reserve Bank. At the same time as the funds are debited to the paying customer's account, and credited to the payee's account, the corresponding entries are passed to their institutions' accounts with the central bank. In this way the transaction is completed in all its elements—including settlement—immediately and irrevocably. The Reserve Bank and Australian Payments Clearing Association Limited are working towards implementing real time gross settlement at around mid 1998. However, because of the Zero Hour Rule, some uncertainties attach to the effectiveness of real time gross settlement arrangements.When a court-ordered liquidation commences, any payments or transfers of property made by the company thereafter are void, subject to certain exceptions such as payments made by the liquidator. It has been suggested that a court-ordered liquidation may be taken to have commenced at the beginning of the day on which the order was made. (This possibility is known as the Zero Hour Rule.) Accordingly, payments made through the real time gross settlement system could be void if the paying party enters into liquidation. This would undermine the irrevocability of those payments and create severe liquidity problems in the payment system. To prevent this possibility from arising, the bill will exempt real time gross settlement payments from the possible application of the Zero Hour Rule.Integrity of netting for close-out and market contractsIn June 1997 the Netting Sub-Committee of the Companies and Securities Advisory Committee recommended the enactment of legislation to clarify a number of issues arising in netting in financial market transactions. The sub-committee was particularly concerned to ensure that the appointment of a liquidator to a party to a netting contract does not affect the validity of the contract.In its discussion paper on "Electronic Commerce", released as part of the Corporate Law Economic Reform Program in December 1997, the Government indicated that it would be legislating along the lines recommended by the Sub-committee to provide a more certain and robust legal framework for close-out and market netting. These reforms have received strong support from the financial sector.To allow the existing legal uncertainties to remain would leave Australia well behind international best practice in financial market reform. These uncertainties have already been addressed or are presently being addressed in a number of other jurisdictions, including the United Kingdom, France, Canada and New Zealand, and at the international level by the Basle Committee on Banking Supervision, to promote the legal enforceability of netting arrangements.The bill will therefore take up the sub-committee's recommendations and provide legal certainty for close-out netting in the financial markets and for netting undertaken in accordance with the rules governing stock and futures exchanges and the associated clearing houses. It will put the Australian legal system supporting financial market netting on par with that in a number of OECD countries.Enhancing the integrity of close-out and market netting will make it easier for financial institutions and their customers to obtain all the benefits of transactions which are generally regarded as an essential part of sound financial management, such as interest rate and currency swaps and other arrangements which hedge exposures. It will also assist Australian financial institutions to join Exchange Clearing House Limited, an international clearing house for foreign exchange transactions.Ministerial Council for CorporationsThe bill will alter the effect, scope or operation of the Corporations Law. Accordingly, as required by clause 510 of the Corporations Agreement between the Commonwealth, the States and the Northern Territory, the Commonwealth has notified the States and the Northern Territory of the bill.I present the explanatory memorandum to the bill and I commend the bill to the Senate.CHEQUES AND PAYMENT ORDERS AMENDMENT (TURNBACK OF CHEQUES) BILL 1998The measures proposed by this bill will complement those proposed by the Payment Systems and Netting Bill 1998 to enhance the effectiveness of arrangements within Australia's payments system.Presently, cheques are cleared via a specialised paper clearing stream within that system. As part of those clearing arrangements, and in accordance with long-standing practice, financial institutions collecting cheques deposited by their customers provisionally credit their customers' accounts with the amounts of the cheques deposited. The collecting institutions do not, however, normally allow their customers to withdraw those deposited funds until they are confident that a cheque will not be dishonoured.Having regard to the revocable nature of cheques, and the uncertainty that could arise in the event of the insolvency of a participant in the payments system as to whether cheques drawn on the insolvent participant had been paid or dishonoured, it is not clear that other participants in the system would have a clear and unambiguous right to reverse the provisional credits they had made to their customers' accounts.If unsettled cheques could not be treated as dishonoured, and the provisional credits reversed, collecting institutions would be required to bear the loss so occasioned and would have to prove in the winding up of the insolvent participant for the amount of that loss. In that event, collecting institutions would have to wait for the reconstruction of the affairs of the insolvent participant or for the payment of a dividend in its winding up.To enhance the integrity of Australia's payments system the bill will make it clear that, in the event of the insolvency of a participant in that system, other participants will have a clear and unambiguous right to treat unsettled cheques as "dishonoured". This will allow them to reverse the provisional credits made to their customers' accounts and "turnback" the cheques to their customers. As a consequence, their customers will be required to seek payment in lieu of the dishonoured cheques from the drawers of the cheques (ie. the persons who wrote the cheques). The drawers will, in turn, be required to prove in the winding-up of the insolvent institution for the monies they had deposited in that institution to meet their cheques.The enhanced stability of the payments system, and ultimately the entire financial system, that will result from the measures proposed by this bill, will be to the benefit of depositors at large.I present the Explanatory Memorandum to the bill and I commend the bill to the Senate.CHEQUES AND PAYMENT ORDERS AMENDMENT BILL 1998Cheques have been a mainstay of the Australian payments system for generations. Notwithstanding the advent of newer payment instruments in the last 20 years, including credit cards, automatic teller machines, direct credit payments and EFTPOS, cheques continue to play an important role. Each day, around 3 million cheques worth over $17 billion are written by individuals, businesses and governments in Australia. On average, each Australian will write 55 cheques per year.Extension of cheque issuing rights to building societies, credit unions and SSPsThe bill will expand the range of institutions that can issue cheques in their own name. Credit unions and building societies will be able to issue cheques in their own name, or request their industry special services provider to provide them with a cheque issuing facility.Building societies and credit unions are presently limited to the provision of agency cheques drawn on a bank or to issue "payment orders", with the same rights and obligations under the Cheques and Payment Orders Act 1986 as cheques.Repeal of Payment OrdersIn practice, payment orders have come to be regarded as second-class instruments. This bill proposes the abolition of payment orders and repeal of the provisions of the Act that relate to them.Transitional provisions will preserve the operation of the Act to payment orders issued at the time of commencement of the bill.Miscellaneous amendments The Government also proposes a number of miscellaneous amendments to the Cheques and Payment Orders Act to overcome limitations experienced in the practical application of the Act, and to allow financial institutions greater flexibility in their cheque operations.ConclusionAs the Final Report of the Financial System Inquiry (the Wallis Report) of March 1997 noted, cheque usage in Australia is high by international comparison. The Government anticipates that the measures proposed by the bill, to extend to building societies, credit unions and their special services providers the right to issue cheques in their own name, will do much to:. advance the principles of competitive neutrality supported by the Wallis Report;. enhance transparency in the payments system by making it clear to consumers which financial institution stands behind a cheque; and. facilitate the provision of cheaper and more efficient financial services to consumers, especially to those consumers living in rural and regional Australia.I present the explanatory memorandum to the bill and I commend the bill to the Senate.Debate (on motion by Senator Conroy) adjourned.Ordered that the National Measurement Amendment Bill 1998 be listed on the Notice Paper as a separate order of the day.Bills3447r522Billsr521Billsr5243447Bills received from the House of Representatives.3447Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I indicate to the Senate that those bills which have just been announced are being introduced together. After debate on the motion for the second reading has been adjourned, I will be moving a motion to have one of the bills listed separately on the Notice Paper . I move:That these bills may proceed without formalities, may be taken together and be now read a first time.Question resolved in the affirmative.Bills read a first time.344809:36:003448Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I move:That these bills be now read a second time.I seek leave to have the second reading speeches incorporated in Hansard .Leave granted.The speeches read as follows—CUSTOMS LEGISLATION (ANTI-DUMPING AMENDMENTS) BILL 1998The Government came to office with a commitment to reform the Anti-Dumping System. The coalition outlined this commitment in its Primary Industry Policy "Reviving the Heartland," in which it undertook to "improve existing countervailing and anti-dumping procedures to ensure Australian producers are not disadvantaged," and to "reduce the inquiry period for anti-dumping and countervailing cases". The policy proposed "a maximum total investigation period of 155 days."Australia has committed itself to anti-dumping and countervailing legislation which is consistent with the obligations imposed by the relevant agreements of the World Trade Organisation (WTO). Of particular importance is the obligation that "throughout an investigation all interested parties must have a full opportunity for the defence of their interests", including the opportunity to see all relevant information, to acquaint themselves with the opposing views and to offer rebuttal arguments.At present Australia has a two stage, two agency, investigation process involving Customs and the Anti-Dumping Authority (ADA). Customs undertakes a preliminary inquiry within a statutory period of 100 days (extendable to 120 days in certain circumstances). Where there is a positive preliminary finding of dumping causing material injury Customs can impose provisional measures (securities). Following such a finding the investigation is referred to the ADA. The ADA calls for additional submissions, gathers further information and will essentially re-do what Customs did in its preliminary investigation, although using different information. The ADA process is to be completed within a statutory maximum time frame of 120 days. The Minister then decides on appropriate measures.This system is a legacy of Labor's period in office. It has been criticised by industry on many counts: the time to imposes provisional measures where necessary, by which time long-term damage may have been caused to the Australian industry; the time taken to reach a final finding is too long; and, the two-agency structure creates duplication, inconsistency, uncertainty and additional cost to parties.The anti-dumping system has been reviewed five times in the last eleven years. The most recent of these reviews, the 1996 Willett Report, "Review of Australia's Anti-Dumping and Countervailing Administration", made a number of recommendations for reform of the system, including abolition of the ADA and the introduction of a single-agency system leading to shortened investigations. These recommendations reflected many of the concerns of industry expressed in earlier reviews. The changes which the Government now seeks to introduce draw heavily on Willett's conclusions, whilst recognising that not all his recommendations may be desirable or workable.Willett recommended a two-stage, single agency process: 100 days for the investigation phase (at which time a Statement of Essential Facts would be published), followed by a review period of 55 days, conducted internally, with a final finding to go to the Minister at day 155 (but with an overall investigation period of 175 days for cases of greater complexity).Under existing arrangements, a positive finding is referred to the ADA for a de novo investigation (often mistakenly referred to as a review). The ADA continues the investigation by seeking and verifying additional information to that which was before Customs. This adds 110 days (120 in complex cases) to the inquiry and has given rise to the criticism of duplication and delay. Willett recommended that the only way to achieve reduction in the time taken to 155 days was to substantially reduce the time available for review. He suggested this be done by eliminating the second agency, and introducing a more limited review by the first agency (ie. internal review).At first glance, the Willett model would deliver the reform sought by industry. However, the Willett model has serious shortcomings: its compressed investigation phase would prevent thorough examination of the issues; the opportunities for interested parties to defend their interests would be inadequate; and, its proposal that Customs conduct internal reviews of its findings would call into question the credibility and impartiality of the entire process.The Government has therefore formulated modifications to the Willett model which will overcome these deficiencies. The Government's model meets the objective of a total investigation period of 155 days but delivers to interested parties greater opportunity for a comprehensive consideration of the facts and an additional process of external administrative appeal of the merits.Under the Government's model the ADA is to be abolished and Customs will take on the sole responsibility for the conduct of investigations. An independent body, the Trade Measures Review Office, to serve the newly created public office of Trade Measure Review Officer (TMRO), the person charged with reviewing dumping decisions, will be established within the Industry, Science and Tourism portfolio.Provisional measures in the form of securities will be available from day 60 of an investigation onwards if Customs determines that there is sufficient evidence to warrant their imposition. This is in conformity with the requirements of the relevant WTO Agreements.A Statement of Essential Facts will be issued by day 110, 10 days more than Willett allowed for the initial investigation phase. This additional period will address a major concern of industry, namely that information, particularly regarding exporters, only becomes available late in the initial investigation. Consequently, the local industry has a limited opportunity to raise concerns regarding this information and more importantly the investigating authority has a limited time within which to address those concerns. The additional 10 days will enhance the opportunity for all interested parties fully to defend their interests and will enable Customs to issue a comprehensive Statement of Essential Facts reflecting its reasoned conclusions on all relevant issues.After issue of the Statement of Essential Facts, interested parties will have a 20 day period within which to lodge submissions in response. Customs will then have a further 25 days to complete the investigation, having regard to matters raised in the submissions. It should complete its investigation on or before day 155. Customs will then forward a detailed report and recommendations to the Minister. The Minister's decision in response to the Customs recommendations will constitute a final finding. The investigation will thus be completed within a 155 day time frame in conformity with the coalition's election undertaking. Only in exceptional cases will the Minister authorise an extension of the investigation period.In formulating these reforms the Government recognised that anti-dumping and countervailing investigations and reviews can be disruptive for all interested parties. Investigations may give rise to trade chilling effects, which are to the detriment of exporters, importers and consumers alike. Australian industry views such investigations as creating uncertainty within the market place which may delay investment decisions thereby retarding their economic development and overall efficiency. The Government accepts that it is in the interests of all parties for these investigations and reviews to be completed as soon as is practicable. It is convinced that its proposed reforms have struck a balance between, on the one hand, the desirability of speedily resolving investigations and, on the other, doing so in a manner which is not only consistent with our WTO obligation but in certain respects exceeds those obligations.However, this balance can only be maintained if all interested parties are subject to a discipline which requires that if they wish to participate in the investigation or review process they must ensure that their submissions are lodged promptly. Therefore at various mile stones through out the investigation or review process the Government's reforms confer a power upon the relevant decision-maker to disregard any submissions which are received after specified periods, if there is insufficient time remaining for their proper consideration. Without such powers the statutory deadlines would never be met and the balance which such deadlines are designed to preserve would be undermined.The 155 day investigation phase contains sufficient safeguards to ensure that all interested parties will have sufficient time to identify any errors or other deficiencies in Customs findings of fact and reasoning. A 155 day investigation phase will also ensure that Customs will have sufficient time to be able to respond to such concerns before forwarding a recommendation to the Minister regarding a final finding.Nevertheless, if grounds exist, parties to the case will have the right to have the Minister's decision reviewed by the TMRO. Parties will have a maximum of 30 days following publication of the Minister's final finding within which to lodge an application for review. The application must contain particulars of the basis upon which it is alleged that the investigation was flawed. Other interested parties will then have 30 days within which to lodge responses. The TMRO will then have a maximum of 30 days to consider the matter and to make a recommendation to the Minister. If the TMRO considers that sufficient doubt attached to any aspect of the investigation such as to call into question the Customs' recommendation to the Minister, the TMRO can recommend to the Minister that that aspect of the investigation be remitted to Customs for reconsideration.The significant feature of the appeal mechanism is that the TMRO will not undertake an investigative function. It will be limited to examining the investigation record in light of the arguments raised in the application.This will ensure the outcome of dumping inquiries is decided as quickly as possible, providing certainty in the market place. With the transfer to Customs of the investigative functions of the ADA in relation to applications for continuation of measures after the statutory 5 year time limit and applications for review of anti-dumping measures, it is proposed to extend the current 120 day limit the ADA has to conduct such inquiries to 155 days. This is to provide consistency across the range of investigations to be undertaken by the ACS so as to ensure that the opportunities for all interested parties to fully defend their interests are consistent.Finally, it is proposed to confer on the TMRO the ability to review decisions made by the CEO as to whether an investigation should start, or should be terminated because there is no good reason to continue it, and as to the amount of customs duty paid on particular consignments of goods.CUSTOMS TARIFF (ANTI-DUMPING) AMENDMENT BILL 1998The purpose of the bill is to make consequential amendments to a taxing Act, the Customs Tariff (Anti-Dumping) Act 1975, made necessary by amendments to the Customs Act 1901 proposed in the Customs Legislation (Anti-dumping Amendments) Bill 1998.In Item 57 to Schedule 1 to the Anti-dumping Amendments Bill referred to above, it is proposed to repeal, amongst others, subsections 269TJ (4), (5), (6), (7) and (9) of the Customs Act. These provisions currently permit Australia to take retaliatory countervailing action against another country in certain circumstances. They are inconsistent with Australia's obligations to the World Trade Organisation ("the WTO"). These obligations require that WTO dispute settlement procedures be exhausted before such action can be taken.In that context, the Government has decided to remove from the Customs Act the provisions enabling retaliatory countervailing action to be taken.In consequence, the capacity to impose countervailing duty pursuant to those sections should also be repealed. It is proposed to do this in this bill.DATA-MATCHING PROGRAM (ASSISTANCE AND TAX) AMENDMENT BILL 1998Madam President, the Data-matching Program is an important aspect of the continued efforts of this Government to ensure the integrity of Australia's social welfare system.Over the past seven years, the Data-matching Program has been conducted under the Privacy's Commissioner's scrutiny with careful regard for individual privacy and is an important control on personal financial assistance schemes, helping to keep them free of abuse and fraud. It has been proven over the past two years that it can achieve substantial savings in public expenditure.The Data-matching Program is also valuable in encouraging voluntary compliance with the rules in place to ensure payments are targeted to those in need. It reminds the community that it is not a case of if fraud will be detected, but when. It has now become an important feature of the review mechanisms that are helping to build the integrity of the system and the confidence of the public that the system is, in fact, secure from fraud.There are on-going review and reporting arrangements in place to allow the Parliament to maintain its scrutiny of the Program. The present Government, when in Opposition, argued successfully for continuation of this scrutiny. The Privacy Commissioner continues to play an important role in ensuring that the Government agencies participating in the Data-matching Program abide by the strict conditions already set down in the legislation to protect the privacy of individuals. In addition to the Privacy Commissioner being able to seek information and scrutinise the activities of the Agencies involved in the Data-matching Program, there is a requirement that those Agencies report annually to the Privacy Commissioner. The Act also requires that these reports are laid before the Parliament. There is also a triennial report to the Parliament covering the three previous financial years. The first triennial report is due in the second half of this year.Madam President, in 1996 the Australian National Audit Office conducted a follow-up of its 1993 Audit of Data-matching within the Department of Social Security. This review was in keeping with this Government's election commitment to review the Data-matching Program.Madam President it can be noted that the ANAO's Audit opinion given in its 1996 report was as follows:"Overall the Department has made substantial achievements through implementing legislative changes, improved reporting procedures, savings collection, better targeting and project evaluation processes. These changes have resulted in both substantial increases in savings generated by the Program and in efficiency improvements."When the Data-matching Program (Assistance and Tax) Act 1990 was first enacted it incorporated a sunset clause to take effect in January 1993. That sunset clause has, however, been extended by the Parliament on three separate occasions. The latest occasion was in 1995 when the sunset clause was extended until 23 January 1999. In part the sunset clause was kept in place because of concerns in the Parliament that the Data-matching Program would not achieve the expected savings and in part as an attempt to allow the Parliament to maintain scrutiny of the Program.Madam President, the Data-matching Program has now proven that very substantial savings can be achieved, and the Parliament has been regularly informed of the operation of Program in addition to its deliberations of bills previously introduced to deal with the sunset clause. The Program has become an important feature of the overall social welfare system and one that needs to be given a permanent place in the continuing efforts to maintain and improve that system. In the event that the sunset clause is allowed to come into effect, the loss of savings that could be achieved would be in the order of $560 million over the four years from 1998-99. Accordingly, this bill seeks to remove the sunset clause.Madam President, I commend the bill to the Senate.Ordered that further consideration of the second reading speech of the bills be adjourned until the first day of the spring sittings 1998, in accordance with standing order 111.Ordered that the Data-matching Program (Assistance and Tax) Amendment Bill 1998 be listed on the Notice Paper as a separate order of the day.Bills3451r4543451Message received from the House of Representatives acquainting the Senate that the House of Representatives has made the amendments requested by the Senate to the Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Bill 1998 .3451Bill (on motion by Senator Newman) read a third time.Bills3451r3983451Debate resumed from 5 March, on motion by Senator Ian Campbell:That this bill be now read a second time. 09:37:003451Neal, Sen BelindaSenator NEALB36NSWALP00—I rise to speak in the second reading debate on the Social Security and Veterans' Affairs Legislation Amendment (Budget and Other Measures) Bill 1997. This bill is much like the raft of this government's bills as they relate to the social security portfolio in that, on the one hand, they give a small amount and, on the other hand, they take away again. I always try to be as positive as I can about the positive aspects of a bill that assists people often in very difficult and dire circumstances, but I always feel a little restrained in my congratulations because it is always balanced with something being taken away.I would be very pleased to occasionally get up here and debate a bill, particularly in relation to social security, where I could say completely positive things about the piece of legislation. But this will not be the occasion today because it is a bill much in the way of mixed fortunes, particularly for those who have disabled children under the age of 16 years. Senators might recall that the matter of disabled children has been one of some concern already expressed in this chamber, as already this year—in fact, it may have been late last year—there was a major restriction on the access of disabled children to the disabled children's allowance. In fact, the criteria was changed, and we were assured very early on in the negotiations in the debate that it was a change to the criteria to make assessment easier and more certain. But what we found in the end was that the table being proposed by the government meant that a large number of children who had previously accessed that disability payment were no longer able to access it.This is pretty much a representative lesson that I have learnt from this government. Whenever change is proposed, in the vast number of occasions what change to the criteria for eligibility means is that fewer people end up being eligible. This government saves money on the backs of the unemployed, the aged, the sick and the disabled. I am constantly reminded every time I see the smiling face of Mr Peter Costello, the Treasurer, talking about the $2.7 billion surplus that the people who paid for that surplus are not people like Mr Costello. They are not like most of the people in this chamber who are on pretty good salaries. It was paid for by the aged, pensioners, the disabled, the ill, those going into nursing homes, those people who were having a pretty hard time of it, those people and those families who are on very limited income. They are the people who paid the pain for the $2.7 billion.It is worthwhile remembering when we deal with what appears to be just a few changes in the paragraphs in the legislation—a flick of a pen—that there are real consequences for people out there in the community. We have to always remember that they are real people; they are not people who are disassociated from us. When we are making decisions about social security payments, there will be real human beings whose lives are made a little bit harder if their eligibility is reduced.I suppose I should return to the bill that is before us, because there are some positive measures contained in the bill.BE4NEWMANSenator Newman—Thank you. I thought you had missed them.B36Neal, Sen BelindaSenator NEAL—No, I do have some notes here in relation to the bill, but I wanted to take the opportunity to comment on the budget and I feel very strongly about that issue.There are some positive measures contained in this bill, and that is those that relate to carers. I know that the minister has been at some pains to point out this measure, and now it is coming through our chamber today. To some extent it allows carers to access the carers pension in slightly broader circumstances. What one of the measures has done is that, where carers their caring activities, they still qualify for the carer payment when they have ceased in their caring activities for 63 days—a slight increase on the previous 52 days.It gives the opportunity for a carer who I think is often under great stress, both emotionally and physically, to take a break. That break can now be up to 63 days—two months—rather than the previous 52 days. It is now in line with the existing provisions for the child disability allowance, the domiciliary nursing care benefit and the Commonwealth respite programs. Not only do we have a slight increase in the carers entitlement—it is reasonably slight, it is only a further 11 days—but also we have achieved the object of all bureaucrats in that we also have a very neat arrangement.BE4NEWMANSenator Newman—Good administration is not to be derided.B36Neal, Sen BelindaSenator NEAL—At a meeting yesterday with a group of community people in relation to not social security but child care we were talking about the advantages of certainty, the tyranny of neatness within the bureaucracy and how certainty is important but at the same time it cannot become so overriding that the rules and regulations that apply to real world circumstances become overwhelmingly difficult just because there was a need to make the arrangements neat. For one who has a bit of a tendency to neatness, I think it was a warning that I took on board.BE4NEWMANSenator Newman—How is your linen cupboard?B36Neal, Sen BelindaSenator NEAL—I rearranged that just a fortnight ago. We do have to be careful in making everything conform that we do not adversely affect people's circumstances. Some of the positive provisions contained in this bill are set out in schedule 2—and we do support schedule 2.As I have said, this is a positive part of the bill. It provides for the consistent treatment of lump sum payments under the income test as it relates to carers, and this is regardless of whether the recipient of the lump sum is a pensioner or an allowee. At present, certain lump sums in the nature of income will be averaged over a 52-week period for pensioners, while they may be treated as income for the fortnight of receipt for allowees. It also allows a situation where lump sums which are not exempted will be apportioned over a 52-week period, regardless of the social security payment type.The secretary also has a discretion where he or she may exempt certain lump sums which are not periodic payments, leave payments or income from remunerative work. Exempt lump sums are not subject to the ordinary income test, but the assets test and the deem ing rules will apply. The kind of lump sums a secretary may exempt include lottery wins, gifts and that sort of thing.I suppose the most positive aspect of schedule 2, if I am correct, is that carers for disabled children under the age of 16 years are now covered by this particular payment. This is very much a positive thing, and we are very supportive of that move. I suppose the sad thing about it is that it goes hand in hand with the recent restriction of eligibility for the child disability allowance, which occurred earlier in another piece of legislation. I suppose that means also, because of that restriction, the number of people who now will become eligible for the carers allowance under these new provisions will be fewer than before the changes were made in relation to the child disability allowance.Schedule 3 is a reasonably positive provision also. It simplifies the treatment of income streams under the income and assets test. It provides for a consistent treatment of income streams based on characteristics, such as the term of the income stream and access to residual capital rather than their source. Basically, that means if you have access to an income stream, even if it is from things that are normally treated differently, they will now be treated consistently. In fact, certain long-term income streams where access to capital is lacking will not be subject to the assets test. Shorter term income streams will be subject to an assets testing.There is a negative to all this, despite this government's stated objective of preventing rorting of the system—and I have to accept their statement in good faith. In fact, looking through the media at some of the investment advertising, you yourself might even see pretty easily that this does occur. People have been able to invest large sums of money in short-term income stream investments and, therefore, have large sums invested but still be able to maintain their social security entitlements. I think most people in the community would accept that that is not particularly desirable.On some occasions I have also seen people who carry out these procedures even, in fact, when having invested their money in perhaps more profitable type investments that would have reduced their access to social security payments; in fact, they themselves might have been better off financially even taking into account their social security payments that through their manoeuvring, I suppose you might say, they were able to access. So I suppose it is a good move to prevent this from happening.But perhaps the downside is that there will be about 2,100 people who will lose their pensions because of the fact that they have invested sizeable moneys in certain fixed term superannuation and other schemes. It seems that, when changes are made to catch rorters, there also is always the tendency to catch some genuine people. I suppose I am fearful and concerned, particularly in light of government policy on superannuation taking so long to encourage investment superannuation, that this move could catch some people who are quite genuine.Perhaps the minister, when she is on her feet, might want to discuss this matter in some detail. It is of concern to the opposition, and I am certain it is of concern to a lot of people who have invested in those sorts of superannuation schemes already.The government now intends, I understand, to move further amendments which will tighten up its proposal. I understand that these amendments are aimed at those who might structure their income stream and investments in such a way that their income varies during the period of investment, with this allowing them to obtain access to social security payments that they might not have accessed if they had invested in a different way. I think most of the community would support preventing people from doing this—basically consuming revenue contributed by most taxpayers when in fact such people do have some access to means of support but have managed to structure it in such a way as to take advantage of the rules.There is a serious problem with the bill. As I have said before, a positive part of the bill is that carer payments have been extended to those caring for disabled children under the age of 16. But there is a downside to it, and I will try to run through some of the elements briefly in the time that I have allowed to me. It is difficult to see from the available material who will benefit from this proposal. Most who might qualify for the payment under the proposal are already in receipt of the parenting allowance or the special benefit. Possibly the minister could point out who is and what numbers of people are going to be entitled to this payment who were not already entitled to some sort of payment.Furthermore, the criteria in respect of under 16 year olds are much more restrictive than the existing criteria for older people—that is, the person who is actually being cared for. The minister might want to explain why anticipated outlays for the measure are just over $1 million a year up to the year 2001, because obviously a million dollars does not represent a great number of people. I suppose that ties in with the questions I raised earlier. Who does get a payment who previously did not receive one? What benefit is there if it is much the same people?We understand that there will be only about 100 people eligible for this payment who were not previously eligible for it. Certainly, if this is not the case, I would like to get information about who it is in quite some detail. It seems to me that, if that really is the case, introducing such legislation and publicising it as broadly as obviously it has been publicised really is a two-handed card trick.As for those who, under this bill, receive carers payments for people over the age of 16, the disabled people must be severely handicapped for their carers to qualify. The particular person's disability must be such that they require frequent care in connection with bodily functions or require constant supervision to prevent injury to himself, herself or another person. A child under 16 must be profoundly disabled for his or her carer to qualify. I am sure we will have endless debates about this and we will probably have several court cases too. I think most people would accept that `profoundly' is a harder or a more difficult requirement to comply with than `severely', although I suppose the quantum of the difference is probably pretty hard for me—and maybe for the minister as well—to put.I would like to know, and I am sure the rest of the community would like to know, why there is this distinction—`severely' or `profoundly'—between those people who are under 16 and those people who are over 16. Why make the criteria for carers harder to comply with? Why make it a harsher requirement for those who are under 16 than for those who are over that age? It would seem to me that the effort in caring for a disabled person who is under 16 would, if anything, would be harder—(Time expired)09:58:003454Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—The Senate is currently considering the Social Security and Veterans' Affairs Legislation Amendment (Budget and Other Measures) Bill 1997 and, as with most social security legislation, the Democrats see this bill as a mix of good and bad. As is often the case, we will be supporting some aspects, opposing some others and seeking to improve other bits.Starting at the beginning, schedule 1 of the bill will, from 1 July this year, extend qualification for the carer payment to those people caring for a profoundly disabled child under the age of 16. Under the current arrangements, the carer payment is paid to those who provide care for a `severely handicapped person' aged 16 or more, which for a single person is at a maximum rate of $354 per fortnight and for couples is at $295 each per fortnight.With those parents with disabled children under the age of 16, previous governments have taken the view that primary responsibility for their children's care lies with the family. There is, of course, the child disability allowance of $75 per fortnight, which is paid to parents whose disabled children require substantially more care and attention than other children of the same age. But this allowance is really meant to assist only with the additional costs that parents with these disabled children incur: it is not intended, as the carer payment is, to provide an adequate income to live off.The first schedule of this bill will extend the carer payment to those parents with children under the age of 16 who are `profoundly disabled'. The requirement that the child must be `profoundly disabled' is a much tighter eligibility requirement than applies to the child disability allowance. That reflects the different purposes the government has decided these payments should be designed to meet.At the outset, I have to say that the Democrats are very pleased to see the government extending the reach of the carer payment. No doubt all senators will have received letters from people caring either for a disabled child or for an adult. They will know from those letters, from personal experience or contact with people in the community, that caring is very often a 24 hour a day activity for these people—an activity which precludes many of them from a level of involvement in society and other types of activity which many of us take for granted.It should not be forgotten, and it should be emphasised at every opportunity, that carers make an enormous contribution to society as a whole and the community through their caring role. In doing so they not only contribute a social and community benefit but they also effectively save governments very large amounts of money. The Democrats congratulate the government for moving in this direction. So in relation to this measure we would like to communicate waves of positive affirmation and all those encouraging things one should say when the government does good things—because it is a positive thing.We would, however, have liked to see the government go a little further; that is, we would like to see the eligibility requirements for a profoundly disabled child under this legislation relaxed a little. We do not say this because we feel like making life difficult or spending some more money, but because we feel that under the proposal as put forward by the government there will be some very deserving people who will miss out on the support they so desperately need and who are the type of people whom the Democrats believe this payment is designed to assist. Of the approximate 107,000 disabled children eligible for the child disability allowance, I understand that the parents of about only 450 of them will qualify for the carer payment under this new arrangement. To qualify under the proposed definition a child will have to satisfy three of the conditions set out in section 18A of the bill. I noted the comment in the bills Alert Digest that many of these conditions on their own would ensure that the child needs constant care. It is really the requirement for constant care which is probably the principle that underlies what the carer payment is meant to be about. That is not being adequately recognised in this bill.This issue has been raised by the Carers Association of Australia in a letter to me, which I imagine they have sent to many other senators. They stated that it was of particular concern to their association that there was a framing of the criterion more in terms of medical conditions and disability than in terms of the need for 24 hour care. They pointed out that constant supervision was not included in any of the qualifying criteria. They were also concerned that under the proposed criteria, children with uncontrolled epilepsy, spina bifida, cystic fibrosis, severe autism or a number of psychiatric illnesses may be excluded from assistance and they would be excluded even where their parents were required to provide round-the-clock care for those children.To reiterate, the Democrats do congratulate the government for this reform and this improvement, but we would like to see more disabled children eligible for assistance under these arrangements and we would like to see the focus of eligibility criteria shift a little more towards the level of care that is required for those children. We are also concerned that there is no provision for those families who may have more than one disabled child. In circumstances where no one child necessarily meets the requirements for a profoundly disabled child but the care needs of the family are equal to or greater than if they had a single profoundly disabled child, the Democrats feel they should be eligible for the carer payment, again because of the aim and purpose the payment is intended to address. This is a principle which the government recognised late last year in relation to the child disability allowance and we believe it applies equally in this situation.Another issue raised by the Carers Association—and I believe it is a very valid one—is that, despite the best intentions of legislative drafters, there will always be people who fall through the cracks. That is a hazard of the trade in trying to frame legislation for the social security area in particular. What the Carers Association suggested is some discretion for the department to deem eligible for assistance a family who, while not meeting the prescribed requirements for assistance in terms of the black and white letter which always needs to end up in legislation, are nevertheless in their particular circumstances clearly manifestly deserving of such support. The Democrats would support enabling some discretion for the department to assist people who quite clearly are in need despite the fact that the requirements as outlined in the black and white letter of the law do not necessarily enable them to fit into the appropriate pigeonhole. I indicate now that the issues I have raised in relation to the schedule will be ones that I will pursue in the committee stage.Finally in relation to the schedule, the Democrats welcome the fact that this bill will allow a person to cease caring for a caree for up to 63 days in any one calendar year and still receive their carer payment. Whilst this is a low budget item in terms of outlays—costing only about $80,000 a year—the benefit this measure will bring to the people affected will be enormous. The Democrats fully support this part of the bill.On the same theme, I would like to take the opportunity to congratulate the minister for this year's budget announcement that the carer payment will continue to be paid for up to 63 days when the person receiving care is temporarily in hospital. Again, not a terribly big budget item but for those people it is aimed at it will provide much needed relief to carers, who I again wish to acknowledge and emphasise do play a very important role.The next schedule of the bill I want to comment on is that relating to the introduction of new means testing arrangements for income streams. From 20 September this year the government aims to change the way income streams are means tested. The proposed system will be based on the character istics of the income stream itself rather than, for example, where the income stream was paid from. It is without question that the current means testing of these retirement products is often contradictory and, in some cases, just totally inadequate. It is fairly difficult to understand as well, but these are the things we have to wrestle with in our important role as legislators. The current system is contradictory in the sense that what are effectively very similar products can be subject to very different means testing and subsequently have widely varying effects on the level of payment someone receives from the department. It is inadequate in the sense that some products on the market have been clearly specifically designed by financial institutions and advisers to take advantage of loopholes in the current system.As an example of this, some time back a financial adviser drew the attention of the Democrats to the fact that some people were making use of rolling annuities to avoid the assets test. That meant that very large sums of money could be placed into these products and, due to the depletion method employed to assess these products, these funds were effectively exempted from the social security assets test. So, by simply rolling over these products every 12 months, people maintained their funds—we are talking about hundreds of thousands of dollars here—and were drawing a pension from the public purse. In the type of targeted social security system that we have very much moved towards, that is something that is clearly a problem.The explanatory memorandum to this bill lists a number of other mechanisms being used by people, with the assistance of their financial advisers, to circumvent the intention of the current legislation. These types of products dramatically dilute the effectiveness of the income and assets testing regime set out under the legislation. The effect of that is that the Department of Social Security is forced to change the rules to cover those loopholes. That is what we are seeing in this bill before the Senate today. Regrettably, that means that those people who have purchased their retirement products totally in good faith and within the intention of the legislation may be subject to an upheaval in their retirement plans. That is always something that should be avoided if at all possible.The Democrats acknowledge that the system proposed in the bill before us today is a comprehensive overhaul of the income and assets testing regime applying to retirement income stream products. As I said, we recognise that the way in which the current system is being manipulated is not a situation which could be allowed to continue, particularly because of the targeted nature of the social security system that we have.The Democrats have always been very reluctant to support legislation which may alter the social security entitlements of those who have already purchased their retirement income products. For the reasons that I have just outlined, however, we accept that basically the government had little option but to introduce changes. We believe the proposed system represents a significant improvement on the way in which retirement income streams are treated under the social security means tests. So, once again, the Democrats indicate positive affirmation of the government's intentions and aims in this area. We will be supporting the introduction of the system proposed in schedule 3 of this bill.There is, however, one group of social security recipients we believe should be exempted from this system, that is, those who purchased their allocated pensions or annuities prior to 1 July 1992. These people were exempted back in 1994, when the current system was introduced, for the reasons that I have just outlined. We believe they should continue to be exempted. Again, that is a measure that we will revisit in the committee stage of this debate.The final aspect of the bill that the Democrats would like to mention is the changes proposed in schedule 4 which relate to seasonal workers. The government's stated aim of this schedule is twofold. Firstly, it is to prevent high income seasonal and contract workers from immediately accessing unemployment payments during the off-season or between contracts. This includes such workers as tuna fishers, fruit pickers, shearers, casual teachers and people who perform locum roles in various jobs. Clearly, this will have a significant impact on a number of workers, particularly in rural and regional areas. Secondly, the government's aim is to exclude higher paid casual or contract workers who have their leave entitlements cashed out in their salary from receiving newstart over Christmas shutdowns.The bill itself provides a fairly broad definition of the type of work that will be caught by this legislation. In addition, it contains a power for the secretary to deem certain work to be seasonal work. The effect of the legislation will be that seasonal workers whose wage in the past six months was greater than average weekly earnings will need to serve a waiting period before qualifying for social security payments. The length of that waiting period will be determined by the amount they earned: the higher the earnings, the longer the wait for payments.This proposed change is based on the notion that any person earning in excess of average weekly earnings should have put away funds in case of future unemployment or to cover future lack of employment income. In other words, they are expected to undertake some sort of personal unemployment insurance. This premise will apply regardless of any factors which might have prevented the person saving at that time and completely ignores their current financial circumstances.The Democrats believe that this is just another in a string of enforced poverty measures we have seen over the past few years—indeed, stretching back a number of years now. The aim of many of these measures is to force people to run down any savings they might have before they are able to obtain any assistance from social security. We need to emphasise, when we look at these sorts of measures, that unemployment payments are paid at a rate well below the poverty line and that the average length of unemployment is currently well over 52 weeks. That means that unemployed people really need to be able to maintain some level of savings to see them through until they rejoin the work force, otherwise we really are looking at enforced poverty. The Democrats have great concerns that that will be the impact of this measure on many people.There is a current system of waiting periods, including a liquid assets test which is fairly tight and fairly stringent. The Democrats believe that these measures are more than sufficient to ensure that only those needing assistance are eligible. Indeed, we would say that, in some instances, the waiting and preclusion periods that exist are too harsh. To add an extra measure—as this schedule of the bill proposes to do—will, we believe, compound the unfairness and injustice that some people will be subject to. It is important to emphasise that the existing liquid assets test imposes a waiting period of up to 13 weeks—that is, three months—on those people who have easy access to any significant level of assets. That already exists under the current legislation.There has been a lot of talk lately about ways to remove poverty traps that affect many low income earners. To the Democrats, this is a very important issue in the tax debate as a whole and in the social security legislation, yet this measure increases the pressures on unemployed people to run down their savings. It also increases the pressure on people in terms of those poverty traps.We need to encourage people to try to get out of situations rather than, every time they do get a bit of a chance to build up a few reserves and move out of welfare dependency—and this is constantly identified as a major problem—they are dragged back down again by measures such as this. For those reasons, the Democrats will not be supporting schedule 4 of this bill which tries to introduce that measure.Nonetheless, in closing, I should re-emphasise, so that I do not finish on a negative note, the support of the Democrats for many of the positive measures that this bill does introduce and indicate our thanks to the government for their work in modifying the social security system to more adequately address the existing needs of people out in the community.10:15:003458West, Sen SueSenator WEST1X4NSWALP00—The Social Security and Veterans' Affairs Legislation Amendment (Budget and Other Measures) Bill 1997 is a bit like the curate's egg: there are some parts that are good; there are some parts that are bad. I have concerns about part of schedule 3 in relation to income stream terms of over five years and under five years. I just wonder, with this government encouraging older people to stay at work until they are 70 years of age, what the actuaries might be advising some people to do with their investments when they actually retire at age 70. What are they saying about the five-year period?Our life span, according to the Bible, is three score and 10, which is 70. Seventy-five is beginning to nudge up into an area where people are dying at a faster rate. I wonder what the actuaries may well have to say about that particular requirement. I recognise the need to ensure that people invest wisely and that their investment is not going to be able to take advantage of what may be loopholes but I also would not like to see people disadvantaged if, at age 70 when they retire, they may well have an illness that is not going to see them live more than five years and they might be better off making a certain type of investment which gets trapped under this. I urge the government to look very carefully at that particular issue.The piece that I want to concentrate on is the payments to carers of those under and over the age of 16. I think extending the carers payment is a great idea, I think that increasing the amount is a great idea and I think that increasing the number of days that a person can be away from the person they are caring for is also to be commended. But I have major problems with some of the definitions here. Over 16 years of age a person has to be severely handicapped for the carer to qualify. A person's disability must be such that they require frequent care in connection with their bodily functions or require constant supervision to prevent injury to themselves or to another person.Under the age of 16, in this bill, they must be profoundly disabled for the carer to qualify. I am having difficulty seeing the logic in the differentiation of the definition between the two ages. I know that someone is likely to tell me, `We have improved the child disability allowance and those people who cannot get the carers support pension will be able to qualify for the child disability allowance,' but with the restrictions on and the tightening up of the child disability allowance there are going to be people who will miss out altogether.I am getting quite a number of calls to my office from parents who have children with quite severe disabilities or illnesses and who are now finding, because the child has hit the magic age of six, seven or whatever, that they are coming off that allowance. These are children who require a lot of supervision, assistance, actual administration of medication and things like that. But this government has knocked them off. So the difference between severe and profound disability is a major concern. Those in the industry—not the department—of the provision of care to people and diagnosis of people with severe and profound illnesses will tell you that there is quite a significant difference.I have also major concerns that under the bill the disability that will give rise to a child's parents being eligible for the allowance for a profoundly disabled child must have three of the following seven specific circumstances: the child must be tube fed, the child has a tracheotomy, the child requires a ventilator for at least eight hours a day, the child has urinary and faecal incontinence, the child cannot stand without support, the child's condition is terminal and palliative care has replaced active treatment, the child requires personal care on at least two occasions between 10 p.m. and 6 a.m.There are many children who are terminally ill who require palliative care who do not fit into any one of those other categories at the stage when they are transferred from active care to palliative care. They may well have faecal and urinary incontinence when they are very close to their death and they may also not be able to stand without support very close to the time of their death but there are many children around with terminal illnesses on palliative care who do not fit into another two of those criteria.But the smaller those children are, the more love, care, attention, support and affection they require from their parents or carer. They might not require to be fed, they might well be able to toilet themselves, they might well be able to walk around as their condition enables them; what their needs are are more the spiritual and tender loving care needs than the active hands-on medical model. This is very much the medical model. This does not take cognisance of the psychological needs of a child or the family, or the spiritual needs of that child. I have a grave concern about it, as I have said.What about a child, for example, who has severe epilepsy not well controlled by medication and who requires supervision? They may, during an epileptic seizure, actually have faecal or urinary incontinence, but they do not require tube feeding, they do not require a tracheotomy, they do not require ventilation, they cannot stand—having an epileptic fit you are not supposed to be standing anyway. But they do not have a terminal illness and they do not require personal care each day at 10 p.m. and 6 a.m. What about that child? That carer is not going to be eligible, from my reading of the bill, and that is a major concern to me.What about children with severe psychiatric conditions who require constant supervision to stop them from harming themselves or from harming others? It would appear to me, as I said, that this is very much the medical model. It is not the holistic model of health that should be being taken into consideration here; it is very much the physical, medical model. Those within the mental health stream might well feel that this is a further indication of discrimination against those with a mental health problem.To people who tell me that these diseases do not occur in children, then I say to them, `That is rubbish! I have cared for children. I have had children in my clinic that I have had to care for who had these disorders or I had to support the parents.' I know that they are rare, but I have had a small child in my clinic who had a disorder so that she was self- destructive. The inside of her mouth was constantly ulcerated where she kept biting it. She kept biting her limbs that she could get to her mouth. I forget the name of the disease, but it was a diagnosed disease and she was self-destructive.She could feed herself; she did not require a tracheotomy; she did not require ventilation; she was not incontinent of faeces or urine; she could stand without support—after she was a baby and had learned to walk. She did not have a terminal illness and require palliative care. She did not require personal attention between 10 p.m. and 6 a.m., but she required constant supervision to see that she did not injure herself. It is quite probable that by the time she hit the age of 16 or 17—if she lived that long; if she had not damaged herself permanently and irreparably and killed herself—she would have automatically gone onto a disability support pension. What about these children?BE4NEWMANSenator Newman—What did you do about them?1X4West, Sen SueSenator WEST—We supported these parents. The psychiatrists were trying every form of medication.BE4NEWMANSenator Newman—What did your government do for them, Senator?1X4West, Sen SueSenator WEST—This was when you were in government last time, Minister.BE4NEWMANSenator Newman—Was it more than 13 years ago?1X4West, Sen SueSenator WEST—Yes, it was, Minister. It was when you were in government last time.BE4NEWMANSenator Newman—Why didn't you move to do something, then?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Ferguson)—Order!1X4West, Sen SueSenator WEST—I wonder about children who have profound intellectual disabilities—those who require assistance with their daily activities. As they get older and bigger and stronger they require a lot of care. Parents are giving up work to care for these people. What makes somebody under 16 different from someone who is over 16 is the question that I ask.BE4NEWMANSenator Newman—Why didn't you ask your own government?1X4West, Sen SueSenator WEST—Minister, you are the one who has introduced the legislation. I am trying to be constructive in assisting you to look at how you can actually improve this legislation and make it better. As I said earlier, the government has done some good things here and I pay you a tribute for that, but let me point out—BE4NEWMANSenator Newman—Well, recognise where it was targeted.1X4West, Sen SueSenator WEST—Maybe you and I disagree on where it is targeted. I want to stand up for those that this government has not targeted, because they are the ones who require assistance for their children. We did target children with disabilities. We were not the ones who tightened up considerably the child disability allowance. We are not the ones who are claiming millions of dollars in savings in that particular area.But I have a grave concern for this because this is an area that I have worked in. This is an area for which I have had responsibility in a professional capacity. Whilst these are not a great number of people, for the families that are involved it is a huge problem. They have major problems to overcome. They require a lot of support and that is something that this is not going to give them. They often have to give up employment so that they can care for their child. I have major concerns about this type of thing.It is wonderful that the government has put in this offer, but I do not think it has thought through the groups that are going to be most adversely affected and the groups that might well be left out of the coverage of this legislation. Maybe it is because people have not thought it through properly. For children with terminal illness, during the last few weeks or months of a child's life the family want to be able to be with that child. People would prefer to have their children at home rather than in hospital. But I wonder, because of this, how many are not going to be able to be cared for at home that could have been cared for at home? That is something of major concern and worry to me.I am sorry if the minister does not like what I am saying. I am sorry if she thinks I have missed the point completely, but this is a group of people that, if you are going to start to provide a service to one, you have to provide it to all. Given that they have already made access to the child disability allowance more difficult, there is going to be a group that used to get some support who now will be getting no support. The opposition will certainly be looking to move an amendment to tighten up those differing definitions because they are of major concern to us.That covers my major concerns with this bill. Some of it does simplify and improve the provisions dealing with hardship rules applying to income maintenance periods and makes them apply to proposed seasonal work and preclusion periods. As I said, please do not think that this bill is something we totally disagree with. There are good parts in it, but the parts that can be improved need to be improved.10:30:003461Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I thank senators for their contributions. As the opposition and the Democrats understand, there are severe time constraints on this bill today if we are to get these important measures into place. We only have this small window of opportunity this morning by agreement between the parties.I will not say any more at this stage and will answer as briefly as I can in the committee stage. I urge those other parties to try to constrain debate as well, so that we can finish this bill in the time that is available to us this morning.Question resolved in the affirmative.Bill read a second time.3461The bill.10:32:003461Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I table a supplementary explanatory memorandum relating to the government amendments and requests for amendments to be moved to this bill. This memorandum was circulated in the chamber on 26 May.Before we proceed, I have just been speaking to Senator Bartlett and I did not have a chance to speak to Senator Neal, but the running sheet as distributed has schedule 1 amendments all through it in different orders. I would propose that we maintain the order of the running sheet, but deal with schedule 1 amendments before we move on to amendments to other schedules.If Senator Neal has a look, she will see that we go from one to three, four to one and four to one. Perhaps we can stick with schedule 1 and work through in the order in which they appear on the running sheet. Is that convenient?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Murphy)—The minister is proposing to deal with all of the schedule 1 amendments first and then move to the schedule 3 amendments, which will mean shifting the running sheet around a bit. Is everybody happy with that?10:33:003461Neal, Sen BelindaSenator NEALB36NSWALP00—Obviously, I have arranged my affairs in relation to the running sheet; but if the minister would like to do it that way, that is fine.10:34:003461Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—The first government amendment to schedule 1 is to oppose schedule 1, item 5, page 5 (lines 5 to 7).10:34:003461Neal, Sen BelindaSenator NEALB36NSWALP00—I was wondering if the minister could explain why this amendment is necessary and what the error was in the drafting that required this to occur. I might say a few words while the minister is trying to get the information. I do understand that from time to time drafting errors do occur, but it is probably important for the chair to know exactly what the nature of the amendment is.10:35:003461Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—It was taken off a version of the act which had not taken into account some other amendments. I am sorry; I am repeating that not understanding what I am telling you. It is just a genuine drafting error. Can I leave it at that for the sake of brevity?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Might I suggest that we come back to that explanation? B36NEALSenator Neal—I would prefer that, rather than pass it without knowing what it actually means.BE4Newman, Sen JocelynSenator NEWMAN—I can explain it a little better. Both the Parliamentary Counsel and the department had taken it off the CCH version of the act, which apparently was wrong. I tell you the truth.10:36:003462Neal, Sen BelindaSenator NEALB36NSWALP00—I am sure it is the truth, but I do not really understand exactly what you do mean; taken what off the CCH version?10:36:003462Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—To draft an amendment to the act they were moving to amend they used a version of the act which was wrong.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Can I ask the minister, is it likely that we could obtain a fuller explanation or is that the sum total of the explanation available?10000Newman, Sen JocelynSenator NEWMAN—I am assured we could. But it was simply a human error that we took a version from a document that was wrong. It has been rectified to deal with the real situation.10:37:003462Neal, Sen BelindaSenator NEALB36NSWALP00—It takes something out, but does not actually replace it with anything. Are you saying that Society Security Act 1991 does not exist? That is the bit that is taken out.10:38:003462Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—The original amendment to the bill was not necessary and has now been deleted.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—The question is that schedule 1, item 5 stand as printed.Question resolved in the negative.10:39:003462Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—by leave—I move:That the House of Representatives be requested to make the following amendments:(2) Schedule 1, item 3, page 4 (lines 25 to 27), omit subparagraphs (iv) and (v), substitute: (iv) the child: (A) has urinary and faecal incontinence day and night; and (B) if under 3 years of age, is expected to have urinary and faecal incontinence day and night at the age of 3; (v) the child: (A) cannot stand without support; and (B) if under 2 years of age, is expected to be unable to stand without support at the age of 2;(3) Schedule 1, item 3, page 4 (lines 31 to 33), omit subparagraph (vii), substitute: (vii) the child: (A) requires personal care on 2 or more occasions between 10 pm and 6 am each day; and (B) if under 6 months of age, is expected to require care as described in sub-subparagraph (A) at the age of 6 months.Schedule 1 of the bill would extend the qualifications for carer payment to carers of profoundly disabled children, as we know. As currently drafted, part of the definition of `profoundly disabled' requires that a child's disability or condition include three or more of seven listed circumstances. Three of those circumstances are age related, and are as follows: the child is at least three and has urinary and faecal incontinence day and night; the child is at least two and cannot stand without support; the child is at least six months of age and requires personal care on two or more occasions between 10 p.m. and 6 a.m. each day.Since the introduction of the bill, extensive consultations have taken place with carer organisations on the impact of the measure. As a result of those consultations, it has been decided that these age related criteria should be extended to include not only a child who is under the age specified in a criterion, but also a child who has the care needs specified and who will not reach the relevant developmental milestone by the specified age. For example, in relation to a child standing without support, qualification would be extended to cover children who are under the age of two and unable to stand without support and who are expected to be unable to stand without support at the age of two.10:41:003462Neal, Sen BelindaSenator NEALB36NSWALP00—I move:(1) Subparagraph 18A(2)(c)(iv), omit "urinary and faecal" (wherever occurring), substitute "urinary or faecal".There was some discussion earlier today during the second reading debate about the concern the opposition had about the restrictive definition for children under the age of 16 years. In fact, the terminology was `profoundly disabled' rather than `severely handicapped', which is the definition for those who are over this age of 16 years.The government did go on to define what `profoundly' means. It requires at least three of very specific criteria to be met. Frankly, each of them in themselves is pretty severe: the child must be tube fed; the child has a tracheotomy; the child requires a ventilator for at least eight hours a day; the child has urinary and faecal incontinence; the child cannot stand without support; the child's condition is terminal and palliative care has replaced active treatment; and the child requires personal care on at least two occasions between 6 p.m. and 6 a.m. each day.Each of those is pretty severe, but under this definition it is required that three of these be met before the carer is entitled to this allowance. I suppose that is why I said at the beginning that, while we welcomed the introduction of this payment, it was pretty paltry as far as it went. For a child to have three of those seven things—each of them, in my view, requiring fairly strenuous and all-encompassing care—is a bit too severe in the circumstances.The amendments proposed by the government broaden those criteria in a very minor way and extend them a little. Under their definition, a child under three who is incontinent does not come within that criterion, but their request slightly broadens it by saying that if it is expected that the child will be incontinent after three—even though the child is under three at the moment—then that criterion is fulfilled. With regard to their request No. 3, under their definition, if you have to get up on at least two occasions between 10 p.m. and 6 a.m. and the child is under six, you do not come within the last criterion. They have slightly broadened it so that, even if the child is under six at the time, if it is expected that once they are over six the carer will have to get up to them on at least two occasions between 10 p.m. and 6 a.m. each day, then that criterion is fulfilled.Of course, it is not sufficient that a child complies with one of those criteria: they must also comply with two others. So, having achieved one of the two matters set out in amendments 2 and 3, it does not necessarily mean that the person caring for them will qualify for this particular payment that is being provided by the government.Our amendment to the government's request again is quite minute. In the fourth criterion, where it refers to the child having `urinary and faecal incontinence', the word `and' is replaced with `or', so in fact the child fulfils the criteria by being incontinent in only one of those regards rather than requiring them to be incontinent in regard to both aspects.As I said, we are in agreement with the government's amendments, but we say that really does not take us very far.10:45:003463Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I recognise that the opposition would like us to extend the definition of the profoundly disabled child—and we will come to their other amendments soon. I recognise that everybody would like to do more for people in these circumstances. However, this was, very deliberately, a carefully targeted measure to help those people who are in the greatest difficulty. It is for children who are dying or in appallingly difficult circumstances. It would never have crossed our minds that it would simply apply to children who have incontinence problems. The opposition's proposal that we are debating right now to remove the word `and' and replace it with `or' does not look very significant, but in fact it is. It means that children who are incontinent would in fact be eligible for this.B36NEALSenator Neal—It doesn't say that.BE4Newman, Sen JocelynSenator NEWMAN—That is how it reads, Senator. I do not know about your reading of it. Therefore, we cannot accept it. It would certainly extend payment, according to the advice I have now, to 1,000 customers, and it will cost $2 million.Quite apart from all that, it was not focused on children with urinary incontinence; it was for a multitude of problems of which a combination of urinary and faecal incontinence was just one of the important elements that help Centrelink to determine whether it is a profoundly disabled child. By removing the `and', you are doing more than you perhaps realise.10:47:003464Neal, Sen BelindaSenator NEALB36NSWALP00—Your interpretation of our amendment is completely incorrect. Whoever has advised you has done so incorrectly because the amendment just changes one particular element of the requirement to say that a child has to have urinary or faecal incontinence. Even if they comply with one of those, it is still only one of the criteria: they still have to comply with two others before their carer can receive the allowance. So your statement that a child with urinary incontinence solely, or their carer, would be entitled to the payment is incorrect.10:48:003464Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—If they are the exact words I used, I am sorry, you are right. Nevertheless, I stand by the advice I have been given, which is that your one little word change would mean that something like 1,000 people would be included who were not intended to be, at a cost of $2 million.10:49:003464Neal, Sen BelindaSenator NEALB36NSWALP00—I must say that I am quite fascinated to hear that estimate of how much it will cost. I would appreciate it if the minister could provide some details of that because it is difficult for me to imagine how they can get the statistics to support that. Maybe the minister could provide them.Essentially, the minister is saying that, for example, if a child has a tracheotomy and needs to be on a ventilator for at least eight hours a day and has urinary incontinence, then their carer should not be entitled to a payment. Minister, I think what you are saying is bizarre, that the carer is not entitled to the payment. It is so much less work for someone if the child they are caring for only has urinary incontinence and not faecal incontinence as well. I find that hard to understand, and I find it extraordinary that you, Senator Newman, would put that.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Murphy)—The question is that the amendment moved by Senator Neal to government request No 2 be agreed to. Question put.10:55:00The committee divided. (The Chairman—Senator S. M. West)31Allison, L. Bartlett, A. J. J.Bishop, M. Bolkus, N.Bourne, V. Brown, B.Campbell, G. Carr, K.Colston, M. A. Conroy, S.Cooney, B. Denman, K. J. *Evans, C. V. Forshaw, M. G.Gibbs, B. Harradine, B.Hogg, J. Lees, M. H.Mackay, S. Margetts, D.Murphy, S. M. Murray, A.Neal, B. J. O'Brien, K. W. K.Quirke, J. A. Ray, R. F.Reynolds, M. Sherry, N.Stott Despoja, N. West, S. M.Woodley, J.29Abetz, E. Brownhill, D. G. C.Calvert, P. H. Campbell, I. G.Chapman, H. G. P. Coonan, H.Eggleston, A. Ellison, C.Ferguson, A. B. Ferris, J.Gibson, B. F. Heffernan, W.Herron, J. Hill, R. M.Kemp, R. Knowles, S. C.McGauran, J. J. J. Minchin, N. H.Newman, J. M. O'Chee, W. G. *Parer, W. R. Patterson, K. C. L.Payne, M. A.Reid, M. E.Synon, K. M. Tambling, G. E. J.Tierney, J. Vanstone, A. E.Watson, J. O. W.Collins, J. M. A. Alston, R. K. R.Cook, P. F. S. Macdonald, I.Crowley, R. A. Macdonald, S.Faulkner, J. P. MacGibbon, D. J.Lundy, K. Lightfoot, P. R.McKiernan, J. P. Troeth, J.Schacht, C. C. Crane, W.* denotes teller(Senator Boswell did not vote, to compensate for the vacancy caused by the resignation of Senator Bob Collins.)Question so resolved in the affirmative.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Murphy)—The question is that government request No. 2, as amended, and government request No. 3 be agreed to.Question resolved in the affirmative.10:58:003465Neal, Sen BelindaSenator NEALB36NSWALP00—by leave—I move:That the House of Representatives be requested to make the following amendments:(1) Schedule 1, item 3, page 4 (line 13), before "continuous personal care" insert "constant supervision which is substantially greater than that required by a child of the same age who does not have a disability or".(2) Schedule 1, item 3, page 4 (after line 22), after subparagraph (c)(ii), insert: (iia) the child needs substantially more assistance with feeding than that required by a child of the same age who does not have a disability;(3) Schedule 1, item 3, page 4 (line 33), at the end of paragraph (c), add: ; (viii) the child requires constant supervision, which is substantially greater than that required by a child of the same age who does not have a disability, to prevent injury to himself or herself, to another person or to property; (ix) any other circumstance which, in the opinion of the Secretary, indicates that the child needs substantially more care or attention than a child of the same age who does not have a disability.The effect of these amendments is again not overwhelming. They are intended to extend the criteria for those children under the age of 16 in some small way; that is, in relation to request No. 1, that the words `continuous personal care' be replaced by the words `constant supervision which is substantially greater than that required by a child of the same age who does not have a disability'.As you can see, there may be a child who does require a great deal of supervision, but it may not be required continuously, at every moment. Essentially, what is required by the bill as it is presently drafted is for continuous personal care—for the carer to be in attendance at every moment. We believe that is too much and that the option we proposed is a more reasonable and, I suppose, middle ground in terms of the requirements.Presently, under proposed subsection 18A(2), the child who is being cared for must satisfy at least three out of seven matters, and they are the matters I read out in the debate on the earlier amendment. Request No. 2 adds to the list a further circumstance in relation to children who require substantially greater assistance with feeding because of their disability. It does not change the fact that you are still required to satisfy three criteria, but it adds an eighth element to the list of matters—that is, that the children require substantially greater assistance with feeding as a result of their circumstances.Request No. 3, again, slightly changes subsection 18A(2). It adds a further circumstance again—so that would be a ninth circumstance, of which three must be satisfied—and that is a general discretion to treat other circumstances as relevant. As we know, in drafting legislation, even though we may try to cover every possible criteria, there may in fact be some criteria that have not been thought of, that the minister or the department has not turned their minds to, that may actually have a very major impact on whether full-time care is required. This particular amendment allows such circumstances to be taken into account by the secretary.11:02:003465Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—These amendments are identical to the amendments that the Democrats would have moved, and, obviously, therefore we support them. As I detailed in my speech in the second reading debate, the Democrats believe that the definition of a profoundly disabled child needs to be broadened to meet the aims that the payment is designed for and, as such, these amendments insert additional circumstances in which a child will be seen as profoundly disabled for the purposes of the act.11:03:003465Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—As I said during consideration of the previous amendment, I think that the opposition and the minor parties misunderstand the purpose that this was established for. In their efforts to help more people, they have expanded the eligibility criteria to a level that was never envisaged by the government at all.Honourable senator interjecting—BE4Newman, Sen JocelynSenator NEWMAN—You understand that? Remember, if you had wanted to do this, you had 13 years in which to do it. I want to quickly put on the record just what the situation is. Your amendments would result in the measure losing its focus on assisting families in high-level caring situations. They would open the measures to a broad range of customers for whom it was not designed. Your three additional criteria will result in parents and carers of children with moderate disabilities entering the program, whereas the initiative is designed to capture families providing intensive or palliative care.The three criteria you are proposing will result in the payment being available to carers of children with moderate conditions, such as behavioural disorders including attention deficit disorder or oppositional defiant disorder. Children with these conditions, for example, may require substantial assistance with feeding, substantial supervision and extra attention in other functional areas such as communication, mobility, self-care skills, social and community skills. But the needs of children with disabilities such as these, when compared with the needs of children requiring intensive care for conditions such as dumping syndrome, are significantly less.I want to give you an example of what this is really about. A nine-year-old child suffers from dumping syndrome—an extremely rare medical condition which results in her receiving insufficient nourishment from normal meals. She needs to be fed constantly, 24 hour a day, via a tube direct into her large intestine. She requires constant monitoring, as inconsistencies in feeding will result in unstable blood sugar levels and a risk of becoming comatose if untreated. The child is able to survive approximately 40 minutes without receiving formula. She also suffers from urinary incontinence and severe constipation, requiring daily enemas and other medications. The child also requires several other medications each day.In their caring role, the parents need to check and record their daughter's blood sugar levels constantly, they need to load and calibrate the formula pumps and monitor the tube at all times to prevent kinks and blockages. The jejunostomy site must be cleaned and cared for. The child's baths need to be strongly supervised so as not to dislodge the tubes. The administration of the enema, and bathing and cleaning of the tubes and surrounding areas require both parents. Night-time care is monitored by an alarm attached to the formula dispensing pump as well as via a baby monitor. On any given night, the parents may be required to attend to the child on up to 12 occasions.That is the kind of profoundly disabled person we are talking about. That is why I am concerned that you are diminishing a very important measure. You are jeopardising a very important measure by opening it up to families which do not have the same disabilities to contend with. The reason for my concern is that your amendments would add at least $36 million per year to the cost of the measure, compared with the current estimated cost of $1 million. You are potentially including something like 16,000 extra families because of your amendments—that is what you will do. Maybe you did not intend that, but that is the advice I have received.11:07:003466Neal, Sen BelindaSenator NEALB36NSWALP00—Obviously the case described to us by Senator Newman was very disturbing, and we all have a lot of sympathy, but nothing I am proposing takes away from the care for that particular little girl or stops her from receiving a payment. All it does is extend it to other people who I believe, and the opposition believes—and many people in the community believe—are also in circumstances where they should be given the assistance of a carers payment.It is untrue to say that our amendments will mean that people with only a moderate disability will receive the payment. If you are describing someone who requires supervision at the level set out in our amendment and assistance with feeding but who must also comply with the criteria that presently exists, I do not believe that that is moderate. In my view, just one of the conditions set out here would certainly be in the community's mind much more than a moderate disability. How can you say that a child who has a terminal condition and who requires palliative care is only moderately disabled? I find that incomprehensible.The minister cited figures earlier in this debate, and I asked her to provide the statistical back-up for those figures and the department was unable to give them. I will ask for them again, because it has become quite common practice for these sorts of figures to be quoted but very seldom do I ever get any real back-up. On the last occasion when I tracked down some information given like that, I was told eventually, after pursuing it for some time, that it was based on evidence provided by the department on an anecdotal basis and that they could not really disclose it because of privacy. In terms of anything that we could examine as members of the Senate who have a responsibility to examine information given, nothing was available to us. I ask you again for any statistical back-up to that proposition, because I have not found it in response to my previous requests yet.11:09:003467Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I point out that the previous amendment for which I was asked to supply information was given to me this morning. Therefore, Senator Neal could hardly expect to have back-up information available for that amendment. I do have back-up information for what I have just said, and I think it would be important for you to take it in carefully.The costings that I have just given to you were based on the field testing data of nearly 400 child disability allowance tool stage 2 parent questionnaires. In preparing the costing, the department analysed the responses for those functional domains which correspond most closely to the additional criteria proposed in the opposition amendments. The assumption is that, for a child to be classified as requiring substantial additional assistance or supervision in a particular domain—for example, feeding—the parent would indicate that their child has a significant deficit in that domain.In regard to your amendment that the child needs substantially more assistance with feeding than that required by a child of the same age who does not have a disability, 35 per cent of parents surveyed reported that their child was at least one descriptor behind in self-care skills, including feeding and meal time skills. In relation to your amendment about a child requiring constant supervision which is substantially greater than that required by a child of the same age who does not have a disability to prevent injury to himself or herself, or to another person or to property, 49 per cent of parents surveyed reported that their child had one of the behavioural descriptors in the assessment tool and 34 per cent reported that their child had two of the descriptors.In regard to your amendment that any other circumstances which in the opinion of the secretary indicates that the child needs substantially more care or attention than a child of the same age who does not have a disability, 31 per cent of parents surveyed reported that their child was at least one descriptor behind in receptive communication skills, 30 per cent of parents surveyed reported that their child was at least one descriptor behind in expressive communication skills, 30 per cent of parents surveyed reported that their child was at least one descriptor behind in social and community skills, and 12 per cent of parents surveyed reported that their child was at least one descriptor behind in mobility skills.As a result of those findings, it is estimated that, under the proposed amendments that the opposition and the Democrats are bringing forward today, at least 30 per cent of the current child disability allowance population of 120,000 would be eligible for carer payment, and based on CDA experience 50 per cent of them would satisfy the income and assets test. Therefore, the proposed extensions to eligibility would potentially open up the carer payment to an additional 18,000 carers of profoundly disabled children under 16 years of age. Multiplying the expected population by the unit cost of the current meas ure—that is, $1 million divided by 500 recipients—gives an estimate of a total program cost of $36 million. I urge you to think again.11:13:003468Quirke, Sen JohnSenator QUIRKEZS6SAALP00—I wish to indicate to the Senate that I may have a potential conflict of interest on this particular bill. I say `potential' simply because it will not appear in my pecuniary interest, but I do have a mildly intellectually disabled child. Although he is in receipt of no benefit at this stage, and I am not expecting that he will be, it is possible because of the particular problem that he has that he may in the future be a recipient of extra government assistance at both the state and the federal level. I thought in the interests of making an honest declaration here that I should do so now.11:13:003468Patterson, Sen KaySenator PATTERSONLI4VICLP10—I wish to add my voice to the debate, because I want to congratulate Senator Newman on the fact that she has introduced this measure to give a benefit to parents of children who are profoundly disabled. It has never been done before. I would hate to see—and I ask that the Democrats listen very carefully to this, and hopefully Senator Harradine is listening—this benefit jeopardised because at the moment we are not able to afford to extend it as far as these amendments before us would try to do. To do what is being done today may jeopardise the benefit flowing to those people who have profoundly disabled children and who have never received a benefit and ought to be recognised by the Australian community as bearing a huge burden. I ask the Democrats and Senator Harradine to very seriously consider whether they are going to support that amendment, which I believe will make the system unworkable and so difficult to administer because you cannot define exactly to whom the benefit ought to go because it gets so broad. I would ask people to think very carefully about that.11:15:003468Neal, Sen BelindaSenator NEALB36NSWALP00—I must say that I just cannot see it as a great tragedy that 16,000 parents of profoundly disabled children will receive a benefit; I would see it as a good thing.I would ask for clarification on an issue I raised in my speech during the second reading debate. Would the minister advise us: under this amendment, how many more people who presently do not receive some other benefit will receive this? You have stated that that greater number of people received this particular payment. But my advice is that many of those people already receive some benefit of some other type, and that the difference it would make would be only about 1,000 people.11:16:003468Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I think Senator Neal forgets that there are fringe benefits that go to people who currently are on a benefit that does not attract them. For example, parents who are on a special benefit are not getting the benefit of a pensioner concession card. As you would know, that card opens up a lot of opportunities for people to reduce their living costs. Also, when two parents are involved in this total care, there is the potential for two carer payments. In addition, the parents, if they do not have to stay on special benefit, no longer have that very onerous requirement of job search requirements and activity testing.In every way it is a great improvement for the families who are applying for this. But we estimate that it would be somewhere between 400 and 500 people who would be eligible. Question put: That the requests (Senator Neal's ) be agreed to.11:21:00The committee divided. (The Temporary Chairman—Senator S.M. Murphy)30Allison, L. Bartlett, A. J. J.Bishop, M. Bolkus, N.Bourne, V. Brown, B.Campbell, G. Carr, K.Conroy, S. Cook, P. F. S.Crowley, R. A. Denman, K. J.*Evans, C. V. Gibbs, B.Harradine, B. Lees, M. H.Mackay, S. Margetts, D.McKiernan, J. P. Murphy, S. M.Murray, A. Neal, B. J.O'Brien, K. W. K. Quirke, J. A.Ray, R. F. Reynolds, M.Sherry, N. Stott Despoja, N.West, S. M. Woodley, J.29Abetz, E. Brownhill, D. G. C.Calvert, P. H. Campbell, I. G.Chapman, H. G. P. Coonan, H.Eggleston, A. Ellison, C.Ferguson, A. B. Ferris, J.Gibson, B. F. Heffernan, W.*Herron, J. Hill, R. M.Kemp, R. Knowles, S. C.McGauran, J. J. J. Minchin, N. H.Newman, J. M. O'Chee, W. G.Parer, W. R. Patterson, K. C. L.Payne, M. A.Reid, M. E.Synon, K. M. Tambling, G. E. J.Tierney, J. Vanstone, A. E.Watson, J. O. W.Collins, J. M. A. Crane, W.Cooney, B. Alston, R. K. R.Faulkner, J. P. MacGibbon, D. J.Forshaw, M. G. Troeth, J.Hogg, J. Boswell, R. L. D.Lundy, K. Macdonald, S.Schacht, C. C. Macdonald, I.* denotes teller(Senator Lightfoot did not vote, to compensate for the vacancy caused by the resignation of Senator Bob Collins.)Question so resolved in the affirmative.11:24:003469Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—by leave—I move:That the House of Representatives be requested to make the following amendments:(4) Schedule 1, item 8, page 6 (after line 1), at the end of the item, add:Qualification when caring for 2 or more children with disabilities(1AB) A person (the carer ) is qualified for carer payment if: (a) the carer personally provides constant care for 2 or more disabled children; and Note: See subsections (2 ) and (2AA) below for the circumstances in which this requirement is modified. (b) the care is provided in a private residence that is the home of the disabled children; and (c) subsection (1BC) (description of care receivers) applies to the disabled children; and (d) the carer is in Australia.Note 1: See subsections (2 ) and (2A) below for the circumstances in which this requirement is modified.Note 2: For care see subsection 18A(1).(5) Schedule 1, item 13, page 6 (after line 24), at the end of the item, add:(1BC) This subsection applies to 2 or more disabled children if, in the opinion of the Secretary, the children require a level of care that is at least equivalent to the level of care required by a profoundly disabled child.Note: For profoundly disabled child see subsection 18A(1).These requests are designed to assist families with two or more disabled children. They provide that, where in the secretary's opinion the level of total care required by those children is at least equal to the level of care required by one profoundly disabled child, the parents will qualify for the carer payment. The requests for amendment are aimed at those families where none of their disabled children individually satisfies the requirements for a profoundly disabled child. The Democrats believe it would be unjust to deny parents in these circumstances from having assistance as they will be spending just as much time—and potentially in some circumstances more—in caring for their children than would the parent of a single profoundly disabled child.11:25:003469Neal, Sen BelindaSenator NEALB36NSWALP00—We are supporting these requests. We believe that a carer who is looking after two children, even though they may not actually satisfy the criteria individually, obviously has a burden imposed that should be allowed for under this payment. We will be supporting the Democrats.11:25:003469Patterson, Sen KaySenator PATTERSONLI4VICLP10—I find this whole debate absolutely stunning. For the 13 years that it was in government, Labor did nothing for parents looking after profoundly disabled children, and now they sit here in this hypocritical way extending it to a point where it will be very difficult to be able to afford it. Labor did nothing about it in government and now there is a possibility of jeopardising the whole bill and jeopardising all the other benefits, but also jeopardising the benefits for people with profoundly disabled children. This adds another $36 million.B36NEALSenator Neal—It does not.LI4Patterson, Sen KaySenator PATTERSON—This adds another $36 million to your promises—spend, spend!—and there will not be money left for anybody, let alone people with profoundly disabled children. I find this debate today very distressing, very disturbing and very sad.11:26:003470Brown, Sen BobSenator BROWNQD4TASAG00—I must respond to that. If Labor has been behind the mark in extending benefits—LI4PATTERSONSenator Patterson—Thirteen years behind the mark. They did nothing, Bob.QD4Brown, Sen BobSenator BROWN—and in ensuring that people with profoundly disabled children and disabled children were given adequate assistance, I do not think it is going to help the situation to criticise people who want to ensure that assistance is given now.Senator Newman interjecting—QD4Brown, Sen BobSenator BROWN—I would remind Senator Patterson and Senator Newman that we are talking here about $36 million for assistance to people who have more than one disabled child.LI4PATTERSONSenator Patterson—No, sit down. You have missed the point.Senator Newman interjecting—10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Order! Senator Patterson, Minister.QD4Brown, Sen BobSenator BROWN—The minister was commenting on the previous vote, and now we are going to another vote and an amendment that has been put forward by the Democrats which is being supported by Labor and the Greens.But let us take the last vote and the $36 million that Senator Patterson is concerned about. Just last year this government broke policy to turn around the diesel fuel rebate and give BHP alone $112 million on a silver platter in return of its diesel fuel levy. That does not go to other people who pay the tax. It was BHP—one company. That $112 million goes straight across into the profits and into the shareholders' pockets and, no doubt, into the increase in payments to the executives of BHP, a number of whom are getting more than a million dollars just this year. And Senator Patterson cavils about $36 million being extended to this cause. I do not think she has got many grounds on which to do that. I think that if there was a better look at the distribution of funding by this government, which has repeatedly cut welfare in this country—LI4PATTERSONSenator Patterson—This is extending it.BE4NEWMANSenator Newman—Why don't you read the legislation?QD4Brown, Sen BobSenator BROWN—and advantaged the rich and wealthy, then the members opposite would not be complaining about a further $36 million being given to people in need in this country. Extend the welfare—that is great—but when positive suggestions come forward for a marginal, further extension of that welfare to people in need—and you will not deny that they are in need, Senator Newman—BE4NEWMANSenator Newman—I brought it forward!QD4Brown, Sen BobSenator BROWN—Yes, congratulations.BE4NEWMANSenator Newman—And now it won't happen because of this.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Order!QD4Brown, Sen BobSenator BROWN—It only will not happen if Senator Newman's party says, `We're not going to extend this further welfare, this further warranted welfare, this marginal amount of $36 million.' It only will not happen if the government says, `We're not going to go along with that.' I suggest that they take a third of that BHP cheque for this year and give it to a much worthier cause.11:29:003470Neal, Sen BelindaSenator NEALB36NSWALP00—I had received some requests from the government to try to speed up this debate so that they could get on with their other bits of legislation. I was attempting to cooperate but we have had Senator Patterson getting up and making those sorts of provocative comments. When you tell us that you would like us to speed up the debate and then you spend the time of the chamber attacking the previous government then I do not think that you are very genuine.We have a particular circumstance at the moment with a $2.7 billion surplus and this government—Honourable senators interjecting—10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Murphy)—Order! Senators ought to be concerned about the debate but also about more appropriate conduct in this chamber.B36Neal, Sen BelindaSenator NEAL—As I said at the beginning of the second reading debate, you have a $2.7 billion surplus cut from low income families and those who are unemployed, old, ill and disabled. You accumulate a $2.7 billion surplus from those people but you say, and Senator Patterson gets up and says, `If we have to spend $36 million on profoundly disabled children then we will reject the whole package.' I find that astonishing.BE4NEWMANSenator Newman—It is not finished. You did not get it finished in time.B36Neal, Sen BelindaSenator NEAL—If you think that excuse is going to wash out there in the community you have another thing coming, Minister, because I do not believe it will.Requests agreed to.11:32:003471Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—The first Democrat amendment to schedule 3 reads as follows:Schedule 3, item 5, page 33 (lines 9 to 12), to be opposed.I will speak to the five Democrat amendments; they all address the same topic. As I outlined in my speech in the second reading debate, schedule 3 of the bill deals with the new system of means testing for the various retirement income stream products. The existing system of assessment for allocated pensions and annuities was introduced back in 1994. When that bill was debated, a majority of the Senate voted to exempt those people who had purchased their allocated pensions or annuities prior to 1 July 1992, which was the date of the then government's security and retirement statement on superannuation which included the new means test treatment of those pensions. As such, the pre-1992 treatment of allocated pensions and annuities has applied to these people for many years now. The Democrat amendments Nos 1 through 5 standing in my name are simply designed to maintain that exemption; that is, those people will continue to be treated the way they have been for the past six years or more. I understand that there are only about 1,000 people involved here.While it does retain a bit of an anomaly, if you like, and different people will come out ahead or behind in relation to the new treatment for pre-1992 people, the basic principle that was applied when the Senate originally considered this back in 1994 of people having a consistent understanding of how their pensions, annuities or retirement incomes are arranged is an important one and where possible we should seek to maintain the way that people's income arrangements are treated.11:34:003471Sherry, Sen NickSenator SHERRYZW4TASALP00—There are some remarks I do want to make about this because this measure will impact significantly on an unknown number of people—I would like the minister to give me a best estimate. I certainly believe that thousands of retirees will be classified as self-funded retirees on a part pension. The effect of it is retrospective. I have two letters from people who are retired: one person is aged 71 and the other, the President of Australian Pensioners League, is in his 80s. The difficulty with this measure is that it forces people to unravel their retirement income stream purchases. I would like to know the number who will be required to unravel. Secondly, Minister, could you give us a precise estimate of the savings the government believes will result from this measure?Minister, I also draw your attention to an answer you gave last week in respect of self-funded retirees. You were stressing in the answer to that question that, in respect of the health card issue, self-funded retirees who had struggled and saved and put money aside during their working lives to encourage thrift were being rewarded for that. Here we have a similar category of people in their retirement years—the people who have contacted me are in their 70s and 80s—who are being forced to unravel long-term retirement income contracts by the changes you are imposing.The two particular concerns are, firstly, there is a cost to unravelling agreed legal documents in respect of the purchase of income stream products. I understand it may be $1,000 or $2,000, depending on the type of contractual agreement that is being entered into.Secondly, why should people who were given an assurance in 1992—admittedly, you could say by the former Labor government—about the long-term nature of a retirement income product now be required to unravel those arrangements in their retirement years? These are people who have been thrifty and who have saved—people that you, Minister, have acknowledged have been very responsible. This certainly has caused considerable outrage amongst a sector of the retirement community.Very briefly, because we are under time constraints, I want to put on the record some correspondence from a Mr Sydney Horne. He maintains that the government's `new broom' approach, which is supposed to sweep away all so-called anomalies, is fanciful. He said:The stated aims of the government are to encourage private saving to ensure that superannuation and other savings are directed towards providing retirement income.But the reality for Mr Horne is that he will have to unravel his retirement product, his retirement arrangements. It is effectively a retrospective unravelling. I understand Mr Horne wrote to you, Minister. He has forwarded to the Senate Select Committee on Superannuation copies of the correspondence. He was not very impressed with the response. He maintains, and I certainly agree with him, that the effect of this is retrospective. It will affect aged pensioners. He believes that in his case he will lose one-third of his income from a product that he purchased eight years ago. You can understand people's concern—particularly a person who is aged, retired and has done the right thing—that they will lose one-third of their income and will have to seek financial advice at a cost. This reminds me somewhat of the issues we debated last year with the deeming of superannuation when a person reaches age 55. Harsh outcomes have been the result of that government measure.I know we are under a time constraint, and I very much regret that because this is a change that will, I believe, adversely affect many thousands of retirees. They will have a great deal of worry and concern imposed on them by what I believe is a very harsh and unjust measure.LI4PATTERSONSenator Patterson—I hope you don't join your colleagues and undertake a scaremongering campaign.BE4NEWMANSenator Newman—When he knows the facts he won't.ZW4Sherry, Sen NickSenator SHERRY—I will take those interjections. There is no need to start a scare campaign in respect of the deeming of superannuation for people who hit 55 because we have had a significant number of representations from those individuals, and they are deeply aggrieved. As evidenced by the correspondence I have received on this matter, there will be a significant number of individuals. We will not need to run a scare campaign about it all. They are very scared as a result of what your government is attempting to do.There is one last question I would like to ask the minister. On page 21 of the 1997 budget statement `Savings: choice and incentive', it says:Individuals who have products purchased before this budget will be able to request an exemption from the new rules when they have a contract that cannot be broken or where significant penalties would apply for changing the current contract.I have made some comments about contractual arrangements. Thirdly, Minister, could you please tell me what you regard as a `significant penalty' in financial terms? Is it $500, $1,000 or $2,000? Requests will come to you as minister from people who want to change their contractual arrangements.11:42:003472Newman, Sen JocelynSenator NEWMANBE4TASLPSocial Security10—I am intrigued that Senator Sherry should come in here and purport to discuss this measure in those terms. The opposition was very thoroughly briefed on this measure. I understood that they were supportive of it. I certainly know that this measure was not introduced lightly before there had been long consultation with the retirement industry and with retirees. I also understand that there is considerable support for this measure because of the need to make this a clearer area. There needs to be a more logical basis on which people can assess how they will be affected by social security depending on the product—not the sort of dog's breakfast that we have had.I will get to some hard facts, Senator, because obviously you were not briefed. But Ms Macklin, the spokesperson, was briefed. This is what the impact of the changes is estimated to be in the first year. This is, of course, the crucial year, because it is the year that affects people who are already in these forms of income stream. It affects these people more than it affects people who will come on board in years to come.In the first year, 40,200 customers will receive a pension increase, 16,000 customers will have their rate of pension reduced if they do not take other action, and 2,100 customers will have their pensions cancelled. But 270,000 customers with income stream products will not be affected by the proposal—mostly those with defined benefit income streams. Customers most likely to be adversely affected by the new rules are those who are using loopholes, such as those people with fixed term superannuation pensions. Most will now have their investment included in the assets test, whereas currently all these products are assets test exempt. Those with annuities with terms of five years or less will now be subject to deeming rules and they will no longer receive the benefit of a full year's reduction in asset value at the commencement of their term.There are also very strong arguments against allowing a saving provision for these products because, given that allocated pensions can be commuted at any time, a person could adjust their investments and take out an income stream that is assets test exempt. Some of the main beneficiaries of savings provisions would be people who could either fully or partly provide for themselves in retirement but who are taking advantage of a loophole which allows an assets test exemption to access an age pension or a higher rate of payment.While some may lose their asset test exemption, the income test treatment of allocated pensions will be more generous than under current arrangements, given the use of purchase price as the deduction. If they are subject to a saving provision, this group of people will miss out on the more generous income test. The depleted asset value, as at 20 September 1998, will be used for calculating the impact of the assets test and, given that these products will have been operating for at least six years, the assets value will be substantially depleted in most cases. The assets test may, in fact, have no impact on them given the depleted asset value.Importantly, the ministerial exemption power is available to assist those people who are financially disadvantaged by the new arrangements and who cannot rearrange their affairs without a significant penalty. That is not something new: there are certain circumstances in the social security legislation—a very restricted range of areas, I admit—where the minister does have an exemption power. This would be one of them. Where people could not rearrange their affairs without facing a significant penalty I would be committed to assisting them. But it would be difficult to justify saving provisions which are isolated to those products. It could generate a call for arrangements in place before 20 September this year to be saved.Administratively, the saving provisions would also be very complicated, I am advised. Revised running costs would have to be sought to enable Centrelink to run parallel systems to administer both the current and the new means testing arrangements. So I do suggest to Senator Bartlett that there is a better way of achieving what he would like to achieve through his amendment to save the pre-1992 people. I trust that Senator Sherry is now somewhat better informed than perhaps he was.11:48:003474Sherry, Sen NickSenator SHERRYZW4TASALP00—Thanks for the offensive—B36NEALSenator Neal—Gratuitous remarks.ZW4Sherry, Sen NickSenator SHERRY—slings and gratuitous remarks, Minister. We are attempting to facilitate this bill.BE4NEWMANSenator Newman—I was being helpful.ZW4Sherry, Sen NickSenator SHERRY—Well, you have not helped me on two other issues, and I will get to that in a moment. I understand we will be supporting the measure but it is a very difficult measure to support, given that you are playing off the fact that 40,200 people get an increase and—you have acknowledged this for the record and for the purposes of this debate—16,000 people will have their retirement incomes reduced. I am pleased you have acknowledged that for the record.We have to be concerned about these 16,000 people because they will have a reduction in their income, having entered in good faith into an income stream product purchase that they believed would continue until the day they died. These people now in their 60s, 70s and 80s are in a very difficult situation. The questions I have raised are because of the specific correspondence I have had in relation to this matter. I quoted from page 21 of the budget paper which talks about their having a contract that cannot be broken or where significant penalties would apply for changing the current contract. What is a significant penalty in monetary terms? How will you make that judgment?11:50:003474Neal, Sen BelindaSenator NEALB36NSWALP00—I just want to respond to some matters that were mentioned by the minister in her gratuitous insults earlier. She seemed to be implying that, in one case, the opposition indicated support then there was some change of position. I stated in the second reading debate, and our position is unchanged, that we are supportive of the general thrust of these overall changes in taking account of income streams. But that does not necessarily mean that we are not amenable to the needs of a small group of people, the pre-1992 people, who had allocated pensions and annuities. First, it is relatively defined and small group. Secondly, when it was agreed at the time in 1992 to exempt that group of people, there was general agreement, I am advised, from all parties including us while we were in government and, I believe the coalition—the present government. Maybe the minister would like to enlighten us on that. You mentioned a number of figures, Minister. As I understand it, they relate to the whole raft of changes. We would be very interested to know the cost of the amendment before us now that was moved by the Democrats, not the amount of money involved in the entire schedule.Progress reported.Sitting suspended from 11.53 a.m. to 12.45 p.m.Bills3475r465Billsr466Billsr467Billsr481Billsr479Billsr475Billsr473Billsr469Billsr471Billsr477Bills3475r462Billss161Consideration resumed from 28 May.3475AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY BILL 1998The bill.12:46:003475Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I table four supplementary explanatory memoranda relating to government amendments and requests to be moved to the Australian Prudential Regulation Authority Bill 1998 and six related bills. These memoranda were circulated in the chamber on 26 May last. I move:(1) Clause 56, page 32 (line 7), omit "powers", substitute "functions".12:47:003475Conroy, Sen StephenSenator CONROY3L6VICALP00—I rise to speak in the committee stage of this bill, which is one of the most far-reaching bills to ever be put before the parliament dealing with the financial system. By dint of those far-reaching powers, it has major ramifications at a national, international and regional level.I would first like to start by finding out from the government how it plans to counter the likely impact of some of the measures in this package, particularly the question of banks and consolidation. Small towns in particular in regional Australia are losing their banking services. This is coming on top of losing their Medicare offices and CES offices, albeit supposedly replaced by this new and better service which we have seen on advertisements on the television. Despite this new and better service, my colleague, Senator West, has asked question this week about office closures, lack of access and all the impacts that are currently being felt in the regional centres. Telstra offices and railway stations have closed in regional centres and now there are the government's plans for Australia Post. Regional Australia is getting a raw deal out of this government. Once this bill is agreed to and passed by the Senate almost certainly regional banking operations will be taken away.This bill needs to address that and I am hoping the government can quieten fears of the people of regional Australia about the impact of this bill. It will allow big banks which are making huge profits to close down their banking services, introduce more ATMs and reduce personalised services and access to the banking services that regional Australia needs.In today's Herald Sun there are examples of women in particular being robbed at ATMs. It happens in the city all the time but, as there are fewer opportunities for access to banking services in country centres, one can expect to see the same sorts of problems compounding. Those are the real world impacts on ordinary Australians in regional centres; not airy-fairy impacts such as better competition or impacts on the global market and international financing.The government has an opportunity today to tell us how this measure of reforms, as it calls them, will address that issue. I hope that that will be part of the discussion today with Senator Ian Campbell and that he can reassure us that regional Australia will not suffer just because the government has a cosy deal going with the banks and the Wallis group. Also, just because the Wallis committee said that there are a lot of economic efficiency gains to be made by these proposals, I hope that the government is not wedded to this `free market at all costs' approach and has no role to play.I hope we are in a position where Senator Ian Campbell and the government will explain the benefits to us and how regional Australia will benefit from losing its banking services. As I said, it has already lost its Medicare offices, CES offices and its Telstra centres, and the loss of its post offices is to come. I hope that the government is in a position to explain that to the Senate.I was lucky enough last week to be at a speech given by the Deputy Governor of the Reserve Bank. He talked about his concerns about the trend towards self-regulation and away from what can be called black-letter regulation—that is, parliamentary legislation, to the laissez faire approach. He cited a number of examples around the world where countries have given up sovereignty and the capacity to influence their own economies by opening up without question to the world financiers.This package of bills is in that vein. It is about self-regulation rather than black-letter regulation. It is about allowing flows in and out. It talks about foreign ownership and how foreigners can come in and buy our banks. Banks are very important strategic national institutions. They have a very important role to play in making sure that we control our own destiny, that we are not captive to interests in the US, or interests in Japan, or interests in Europe. Wallis is gung-ho, open slather, throw open the doors, let's have everybody in, irrespective of the consequences.Last week, Dr Neville, Deputy Governor of the Reserve Bank, ran up a bit of a flag to say, `Well, just a minute. There are consequences in allowing that sort of untrammelled access.' He talked about the impact that the untrammelled flows have had in Asia. That is a large part of what has gone on. He was very concerned about the number of capital movements that are short-term, not long-term productive investment—just in, a bit of speculation and out. He was flagging that the Reserve Bank of Australia believes that an untrammelled throw-open-the-gates approach is the wrong one. That is the view of the Deputy Governor of the Reserve Bank. And yet this government seems hell-bent on running down that path.Today is the opportunity for Senator Campbell to tell the Australian people, the Senate, and those in the gallery how this package is going to protect Australians, protect Australia's sovereignty. That is the challenge of the debate in the chamber today: how we are able to see more greatly enhanced national sovereignty and individual protection arising out of this bill.The government have just dropped some amendments on us in the last 24 hours—XE4BOLKUSSenator Bolkus—Few minutes.3L6Conroy, Sen StephenSenator CONROY—In the last few minutes, as Senator Bolkus correctly says. One of them in particular is of concern to me. It is the desire to take away consumer protection from the ACCC. I would have to argue, as others have recently, that the ACCC and Professor Fels have run amok. They have been happy to talk about market monopolies on the supply side, but they have not been prepared to talk about market monopolies on the business side. I think there is a legitimate criticism of the unevenness of the approach of the ACCC.Notwithstanding that criticism, the ACCC is a body that has had many successes in making sure consumers are protected. In the transport industry in which I used to work, the ACCC caught a number of the major transport companies colluding to make sure that prices of courier services were kept high. It was a simple little scam based on an informal agreement. When you phoned one of the major companies in an area that as part of that agreement belonged to the other company they would quote you a deliberately exorbitant amount. You would then check with the company that had been informally designated and they would give you a realistic price—although slightly above what would be a competitive price. The ACCC caught them and fined them $20 million-odd dollars. That is the sort of success the ACCC has had.What we see today is attempts to take the regulation of consumer protection in financial services out of the control of the ACCC and pass it to the new ASIC. It has a massive number in responsibilities. The opposition is supporting the creation of ASIC. We think it is a step forward, but only if it is given the resources to deal with the issues. That is my third biggest concern with this legislation.This government is not fair dinkum about consumer protection in financial services, because it is passing them across to a body which is underfunded—not just slightly but massively underfunded. At the same time, it is trying to foist the MIB on ASIC—that is not `men in black', as some people may know it, but the Managed Investments Bill 1997 —which is a significant shift in corporate practice in this country. It is passing regula tions and laws to heap much more onto ASIC's areas of responsibility and not giving it enough funds. The government is not giving it enough funds just to cope with the MIB legislation, never mind the extra regulation that it is now getting because of lumping consumer protection in with financial services.The government is wiping out the ISC and moving its responsibilities. The ISC has had a chequered history. It has not been perfect; it has been criticised. I have had some dealings with it over time in my previous occupation as a superannuation officer, but it was always running on the smell of an oily rag. And we are seeing too many things being put under the jurisdiction of ASIC and the government not prepared to prove how fair dinkum it is by giving it significant funding.I hope the government will stand up today and argue that it has given ASIC $7 million to deal with MIB and it will be adequately budgeted for. I am hoping Senator Campbell can reassure the chamber about this. I am hoping he can take us through exactly how much extra money ASIC is going to have to cope with these extra responsibilities that are flowing to it by the passage of this bill, by the possible passage of the MIB. I am looking forward to that contribution from Senator Campbell.In closing, I make a couple of points which, at this stage, the government seems to be supporting and which I really want to stress the opposition's position on—that is, the issue of dealing with the foreign takeovers and, more importantly, what is known as the big four, the banks. We will not support mergers between the big banks being allowed. There are already exorbitant profits being made in the banking sector at the expense of ordinary Australians. There is no way this opposition will support legislation that in any way sees a reduction in the limited competition that is there now.The banks are making huge profits, billions of dollars a year, all at the expense of ordinary Australians. I am sure you have all seen the extra charges. When you open your bank statement, there is charge after charge running down the sheet. That has all come about in the last few years as the banks have sought to repair their balance sheets for their poor lending practices in the 1980s and early 1990s when they had to write off millions and millions of dollars worth of bad loans that they made. No-one forced them to make them; they just tossed the money around.The banks have had to recoup that money by going to their loyal customers who stuck with them through thick and thin. Often they were customers with small accounts. The banks have been slugging the ordinary pensioners and battlers they were always claiming to protect. We now see the banks ripping off those battlers. The banks are saying they have no social role and that they do not have to subsidise the poor because that is not their job. That is fair enough. If that is their position, at least they are honest enough to say it before parliamentary committees and to say in the papers that they are not responsible. But, if the banks are not responsible, then who is? This parliament is. That is why we have to be very careful with this legislation.As I said, Senator Campbell, here is an opportunity to reassure Australians and to reassure everybody who is listening today that these reforms will benefit. I will be listening, and lots of Australians will be listening when you speak. We are hoping to be reassured on these issues.13:02:003477Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I am reassured that Senator Conroy thinks that all Australians will be listening when I speak. Maybe my mum will be. Hi mum.ZS6QUIRKESenator Quirke—Have you got one of them?H15Campbell, Sen IanSenator IAN CAMPBELL—A very nice one, thank you very much. Madam Chairman, Senator Conroy does raise some very important questions. I think a very legitimate debate is occurring throughout the community about what is happening to banking and financial services delivery in Australia. As all senators know, that flowed from the implementation of the recommendations following Sir Keith Campbell's committee of inquiry. Those recommendations were put in place by then Treasurer Keating in his early years. We saw the Australian financial system opened up and the entry of foreign banks. Those changes did cause concerns.Clearly, the mergers of major banks that have occurred over the past few years have caused concern. The closure of banks and restricted access to banking services in regional Australia has caused concern. I know in remote areas of Western Australia—as Senator Peter Cook knows well—when you go out to the goldfields they actually have cash flow crises because there is no money in these towns. You cannot go to the pub and cash a cheque in Leonora because there is no money. There are very serious problems.We believe, and I understand the Labor Party share our hope, that these reforms will assist in alleviating those problems. They will do so, we hope—and we can only hope as we try to make the law the best possible facilitator to create change—in a number of ways. You have asked very serious questions on these things, and we hope that the passage of this legislation and the bringing in of the new scheme—which we hope can occur on 1 July, if parliament can pass these bills today—will see changes.One of the most important changes that I personally believe will take place is, indeed, the bringing in of a regulatory system that brings all deposit taking institutions under a similar regulatory regime. We have already seen indications through reforms that this government has put in place, such as the cheque and payment orders bill, which allow building societies and credit unions, for the first time in Australian history, to issue cheques on their own account and not have to go through the expensive routine of issuing them on behalf of another bank. So they are able to provide services to small business at a lower cost than they have ever been able to do before.In many parts of Australia, we have seen credit unions, the credit care movement, building societies and other financial institutions moving in to take up the slack left by the big banks in regional areas. That is something that we encourage.Most Australians have seen the massive influx of Aussie Home Loans and all of these mortgage originators into the home loan market. They are really giving the big banks massive competition. Not only because of the general movement down in interest rates but also because of massive increases in competition, that is seen as a significant reduction which is to the benefit of most Australians in terms of home lending.We have seen some of that flow through into business lending, but not enough yet. The coalition, and I am sure all parties, would love to see more competition in the small business lending sector. I know it is a sector that is close to Senator Murray's heart. We want to see the banks really challenged by originators, credit unions and building societies in the creation of new products for small businesses and in the driving down of the costs of those financial products.They are all things that we think can flow naturally from the so-called Wallis reforms. They are the sorts of benefits that I think Senator Conroy has in mind. I do not think there is any division between the parties on the desirability of that being achieved. That is certainly the intent.In relation to the second tranche of matters raised by Senator Conroy, again, these are very important issues. They relate to international capital flows and the foreign ownership and control of Australian banks. I referred yesterday in my second reading speech to the statement by the Treasurer (Mr Costello) in relation to the four major banks. We have made it the government's policy that the four banks will not be allowed to merge, and we will keep a close eye on competition to the major banks. That remains our policy, and I appreciate the opposition's support for that.We also believe that foreign control is a very important aspect of these major institutions. I incorporated in Hansard the whole of the Treasurer's press release dated 9 April in that regard. It outlines the government's policy in relation to foreign ownership and control of banks, and the mergers of banks. As Senator Conroy asked me to do, I refer any Australian who is interested to the Hansard at page 3091 of 28 May for a statement of government policy.Before addressing the other issue that Senator Conroy raises, I say that I do genu inely appreciate his interest in this subject. I know that when I first joined the Senate I got myself onto the Joint Committee on Corporations and Securities, which he is now an active member of. It is not what one would call a sexy area of public policy—3M6MURRAYSenator Murray—It depends what turns you on.H15Campbell, Sen IanSenator IAN CAMPBELL—That is right. There are people who do get turned on by this, Senator Murray. If I was organising a quiet, romantic night at home with my wife, I do not think I would pull out a copy of the Corporations Law and read it to her to get her amorous. It is not the sort of natural area where you might focus if you are trying to make your political career jump. You get page 3 of the business pages, if you are lucky, on corporate law matters. But Senator Conroy has taken a genuine interest in these areas and is one of the active members who has taken a big interest in the Wallis reforms, the managed investments bill and the company law reform process which is being busily run by this government, and was very actively pursued, I might say, by former Attorney-General Lavarch under the previous government. So there is a lot of work going on there. It is not, as I said, exciting work but, if it is done properly, it can make big changes to Australia, though they will probably not go particularly recognised. Senator Conroy does have an interest there.The funding of the regulator is a very important issue. This has been a concern raised by a number of senators. It has been raised by the consumers association, by corporate governance watchdog organisations and by the business community generally. We want to have a well-funded ASIC; we want to have a well-funded regulator that does its job well. The ASC, under the chairmanship of Alan Cameron, is to be commended for the reforms it has made as part of the ASC 2000 process. It has brought in a lot of efficiencies to its back office tasks. For example, it has saved about 15 per cent by consolidating its property, amalgamating a number of offices and so on forth. It has saved a lot of money.The government treats the funding of the regulator very seriously. We have in this budget announced a $50 million package for the next four years, which is a straight-up boost. We have announced a further $7 million for the two-year transitional period for the managed investment scheme. I have already given the opposition a written assurance—which I repeat here for the record—on the monitoring of the funding needs in relation to both managed investments and the shifting of the new responsibilities under the Wallis proposals to ASIC. We will be continually monitoring the appropriateness of funding for the new ASIC. On top of the $50 million over four years, there is the $7 million special package for the transitional phase of MIB. We have also shifted all of the funding that existed for that section of the operations of ISC that are moving as a consequence of this across to ASIC. All of the funding goes with all of those roles and all of those people.We believe that is a responsible funding package. It is in the government's interest to fund ASIC well in these matters. It is in the government's interest, it is in our crass, pragmatic political interest, to make sure that ASIC performs very well. As chairman of the Ministerial Council on Corporations, I would get crucified by my state colleagues, the state Attorneys-General, distinguished members such as Geoff Shaw from New South Wales, if quality of service deteriorates in any of the service centres provided by the ASC, as it is now, and ASIC, as it will become known as a result of the passage of these bills. There is a very active feedback mechanism in relation to services provided by the ASC.The West Australian business community, as Senator Peter Cook knows well, monitor this very well. They fought the foundation of the ASC, as Senator Peter Cook would well know, because they were very worried about funding and service reductions in the regions. As a West Australian senator, I am ever vigilant about ensuring that the service quality remains in the state capitals. I assure the Senate, all Australians and Senator Conroy in particular that if the funding for ASIC creates any service difficulties or regulatory difficulties I will probably be the first person in this country, this great wide land, that will know about it. I hope that answers the legitimate concerns that you raise.13:12:003480Conroy, Sen StephenSenator CONROY3L6VICALP00—Thank you for that, Senator Campbell. I am sure that that has reassured some people about the concerns that I raised. I would have to concur with you that when I go home in the evening and talk to my partner and she asks me what I was doing for the day, chatting about CLERP and ASIC and MIB is certainly a quick—H15CAMPBELLSenator Ian Campbell—Change the subject.3L6Conroy, Sen StephenSenator CONROY—That is right. I have one quick question which you may be able to get answered by the officials or may like to take on notice, in reference to RAMS and the mortgage originators. Is there any information available, either handy or on notice, about the number of originator mortgages in regional areas in particular? While I know they do a lot of work and a lot of TV advertising and are very successful in the cities, I was wondering whether there is any information available on how they have penetrated into those regional areas to compensate. Is there any information that you have handy?13:13:003480Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I do not have it handy. I do know that they are very active in regional areas in my own state. I know anecdotally that they work throughout the wheat belt trying to steal business away from the banks.The other thing I did forget to mention was that the Treasurer has, as senators would know, asked the House of Representatives Committee on Finance and Public Administration—a committee chaired by David Hawker, MP—specifically to study the provision of banking and like services to regional and remote areas. I understand that committee is beginning to move around Australia to take evidence, and I inform those people in regional Australia who are sitting on their tractors or doing other things, tuned into the Parliamentary and News Network—getting their 8c a day worth—that that committee will be coming to a town near them very soon. I will get you that information, Senator Conroy. I would be very interested in it as well.13:14:003480Cook, Sen PeterSenator COOKRF4WAALP00—The amendment that has been moved by Senator Ian Campbell is to part 6, the secrecy provisions, of the Australian Prudential Regulation Authority Bill. The specific subclause is subclause (6) of that section.There is a penalty of imprisonment for two years for an offence against this section. The section to which the amendment has been moved concerns the possibility of anyone who is an employee or a board member of APRA acting illegally and disclosing information that should not be disclosed. As I read it, the effect of the amendment is to expand the coverage of those who might be caught in the net as possible offenders. That is, if anyone discloses information which ought not be disclosed about the performance of APRA's powers, they are then caught.This amendment includes functions as well as powers. I imagine there is a differentiation between what a function and a power is. It seems to me to expand the net. APRA is the replacement for the Reserve Bank of Australia and the Insurance and Superannuation Commission in terms of the exercise of prudential responsibility for the Australian financial sector; it is the supervisory entity which will oversee the Australian financial industry. From that point of view, it has got to be like Caesar's wife: beyond challenge. I support the expansion—3M6MURRAYSenator Murray—Like Caesar's horse.RF4Cook, Sen PeterSenator COOK—No, not like Caesar's horse.EU4O'CHEESenator O'Chee—It depends which Caesar you are referring to.RF4Cook, Sen PeterSenator COOK—Julius Caesar, from the play Julius Caesar, by William Shakespeare, in which the reference to Caesar's wife is one of absolute purity who is beyond reproach; that is the context to which I am referring to it here.Senator Murray interjecting—RF4Cook, Sen PeterSenator COOK—I can see that this is Friday afternoon and we are getting into raucous and distracting, yet entertaining, asides. Let me stick to the task here. We think that APRA should be beyond challenge, that it is therefore appropriate that this change be made. We will support it.Amendment agreed to.Bill, as amended, agreed to.AUTHORISED DEPOSIT-TAKING INSTITUTIONS SUPERVISORY LEVY IMPOSITION BILL 1998GENERAL INSURANCE SUPERVISORY LEVY IMPOSITION BILL 1998LIFE INSURANCE SUPERVISORY LEVY IMPOSITION BILL 1998RETIREMENT SAVINGS ACCOUNT PROVIDERS SUPERVISORY LEVY IMPOSITION BILL 1998The bills.13:18:003481Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—The government has circulated amendments, which I will now move.3M6MURRAYSenator Murray—Can the minister clarify which sheet they are on?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—B98AE240.WB.H15Campbell, Sen IanSenator IAN CAMPBELL—It is a request. Can I have leave to move all of these together? I will move an amendment in the form of a request to the Authorised Deposit-taking Institutions Supervisory Levy Imposition Bill 1998 . It is amendment No. 1. The references on the top right hand side page of the amendments are 240, 243, 242 and 241. Does that assist you? It is all of the levy amendments. They apply to the General Insurance Supervisory Levy Imposition Bill 1998 , the Life Insurance Supervisory Levy Imposition Bill 1998 and the Retirement Savings Account Providers Supervisory Levy Imposition Bill 1998 . I seek leave to move the requests together.Leave granted.H15Campbell, Sen IanSenator IAN CAMPBELL—I move:Authorised Deposit-taking Institutions Supervisory Levy Imposition Bill 1998That the House of Representatives be requested to make the following amendment:(1) Clause 7, page 4 (lines 21 to 26), omit paragraphs (5)(a) and (b), substitute:(a) if the ADI was an ADI at all times from and including 17 March of the previous financial year to and including the following 30 June—a day in the period from and including that 17 March to and including the following 14 April; or(b) if the ADI was not an ADI at all times from and including 17 March of the previous financial year to and including the following 30 June—the day after that 17 March when the ADI became, or becomes, an ADI.General Insurance Supervisory Levy Imposition Bill 1998That the House of Representatives be requested to make the following amendment:(1) Clause 8, page 4 (line 24) to page 5 (line 2), omit paragraphs (5)(a) and (b), substitute: (a) if the general insurance company was a general insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—a day in the period from and including that 17 March to and including the following 14 April; or (b) if the general insurance company was not a general insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—the day after that 17 March when the general insurance company became, or becomes, a general insurance company.Life Insurance Supervisory Levy Imposition Bill 1998That the House of Representatives be requested to make the following amendment:(1) Clause 7, page 4 (lines 14 to 21), omit paragraphs (5)(a) and (b), substitute: (a) if the life insurance company was a life insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—a day in the period from and including that 17 March to and including the following 14 April; or (b) if the life insurance company was not a life insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—the day after that 17 March when the life insurance company became, or becomes, a life insurance company.Retirement Savings Account Providers Supervisory Levy Imposition Bill 1998That the House of Representatives be requested to make the following amendment:(1) Clause 7, page 4 (lines 14 to 20), omit paragraphs (5)(a) and (b), substitute: (a) if the RSA provider was an RSA provider at all times from and including 17 March of the previous financial year to and including the following 30 June—a day in the period from and including that 17 March to and including the following 14 April; or (b) if the RSA provider was not an RSA provider at all times from and including 17 March of the previous financial year to and including the following 30 June—the day after that 17 March when the RSA provider became, or becomes, an RSA provider.13:19:003482Cook, Sen PeterSenator COOKRF4WAALP00—I have a question. I do not want to delay things, but we are struggling with all these amendments. Can the parliamentary secretary outline what the significance of these changes might be.13:19:003482Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—These government amendments amend four of the levy bills, and I have described those. They are necessary to correct an omission in the methodology used to determine on what assets base the levy on an entity is calculated. The existing clauses inadvertently preclude a range of dates that the Treasurer may need to use which may not allow the Treasurer to determine an appropriate date for some entities to measure their assets. It gives the Treasurer more flexibility to determine those. I understand that they have been the subject of negotiation with the affected institutions. This is the way to achieve the consensus we need.13:20:003482Cook, Sen PeterSenator COOKRF4WAALP00—Thank you for that explanation. My advice, and I see no reason not to accept it, is to indicate on behalf of the opposition that we will support these requests, and I hereby do so.Requests agreed to.Bills agreed to with requests.FINANCIAL SECTOR REFORM (AMENDMENT AND TRANSITIONAL PROVISIONS) BILL 199813:21:003482Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—by leave—I move:(1) Clause 2, page 2 (line 10), omit "subsection (8)", substitute "subsections (8) and (8A)".(2) Clause 2, page 3 (lines 24 to 27), omit subclause (8), substitute: (8) If item 5 of Schedule 2 to the Insurance Laws Amendment Act 1998 commences on or before the commencement of the Australian Prudential Regulation Authority Act 1998 , items 76, 128 and 143 to 149 of Schedule 9 to this Act do not commence. (8A) Parts 3 and 4 of Schedule 9 commence: (a) on the commencement of the Australian Prudential Regulation Authority Act 1998 if that Act commences after the commencement of item 5 of Schedule 2 to the Insurance Laws Amendment Act 1998 ; or (b) immediately after the commencement of item 5 of Schedule 2 to the Insurance Laws Amendment Act 1998 if the Australian Prudential Regulation Authority Act 1998 commences on or before the commencement of that item.(4) Schedule 9, page 107 (line 2) to page 122 (line 1), omit the Schedule, substitute:Schedule 9—Amendment of the Insurance Act 1973Part 1—Changing the administration of the Act (main amendments)1 Subsection 3(1) Insert: APRA means the Australian Prudential Regulation Authority.2 Subsection 3(1) Insert: ASIC means the Australian Securities and Investments Commission. 3 Subsection 3(1) Insert: authorised person means a person authorised under subsection (1A).4 Subsection 3(1) (definition of Commissioner ) Repeal the definition.5 After subsection 3(1) Insert: (1A) APRA may, in writing, authorise a person who is an APRA staff member, within the meaning of the Australian Prudential Regulation Authority Act 1998 , to perform the functions of an authorised person under this Act.6 Section 8 Repeal the section, substitute: 8 General administration of Act (1) Subject to subsection (3), APRA has the general administration of this Act, other than section 113. (2) Subject to subsection (3), ASIC has the general administration of section 113. (3) The Treasurer may give APRA or ASIC directions about the performance or exercise of its functions or powers under this Act.7 Section 19A Repeal the section.8 Section 23 Omit "he or she", substitute "APRA".9 Section 24 Omit "he or she", substitute "APRA".10 Subsection 27(1) Omit "he or she" (wherever occurring), substitute "APRA".11 Paragraph 29(4)(a) Omit "him or her", substitute "APRA or the Treasurer".12 Subsection 29(4) Omit "his or her", substitute "that".13 Subsection 30(2A) Omit "he or she", substitute "APRA".14 Subsection 30(4) Omit "he or she", substitute "APRA".15 Subsection 31(3) Omit "he or she", substitute "APRA".16 Paragraph 31(3C)(a) Omit "him or her", substitute "APRA". 17 Subsection 31(3C) Omit "his or her", substitute "the".18 Subsection 33(2) Omit "him or her", substitute "APRA".19 Subsection 33(2) Omit "he or she", substitute "APRA".20 Subsection 33(2) Omit "his or her", substitute "APRA's".21 Subsection 33(3) Omit "he or she", substitute "APRA".22 Subsections 34(3) and (5) Omit "he or she" (wherever occurring), substitute "APRA".23 Subsections 36(2), (3) and (4) Omit "he or she", substitute "APRA". 24 Subsections 36(2) and (3) Omit "him or her", substitute "APRA".25 Subsection 37(1) Omit "he or she", substitute "APRA".26 Subsection 40(5) Omit "him or her", substitute "APRA".27 Subsection 41(2) Omit "he or she", substitute "APRA".28 Subsection 44(9) Omit "he or she", substitute "APRA".29 Subsection 46(4) Omit "he or she", substitute "APRA".30 Section 49 Omit "him or her", substitute "APRA".31 Subsection 49C(2) Omit "he or she", substitute "APRA".32 Subsection 49E(3) Omit "he or she", substitute "APRA".33 Subsection 49G(2) Omit "the Commissioner's", substitute "APRA's".34 Subsection 50(1) (paragraph (d) of the definition of prescribed person ) Omit "he or she", substitute "APRA".35 Subsection 51(1) Omit "he or she" (wherever occurring), substitute "APRA".36 Paragraphs 51(1)(a) and (2)(c) Omit "him or her", substitute "APRA".37 Subsection 52(1) Omit "he or she" (wherever occurring), substitute "APRA". 38 Paragraph 52(2)(a) Omit "the Commissioner's", substitute "APRA's". 39 Paragraph 52(2)(c) Omit "himself or herself", substitute "itself".40 Paragraph 52(2)(d) Omit "by signed instrument", substitute "in writing".41 Subsection 52(6) Repeal the subsection.42 Subsection 54(1) Omit "his or her", substitute "the".43 Subsection 54(1) Omit "he or she", substitute "an authorised person (if the investigation is by APRA), or the inspector,".44 Subsection 54(2) Omit "Commissioner" (wherever occurring), substitute "authorised person".45 Subsections 55(1) and (2) Omit "he or she", substitute "APRA or the inspector".46 Paragraph 55(1)(c) Omit "the Commissioner", substitute "a specified authorised person".47 After subsection 55(2) Insert: (2A) APRA's powers under subsection (2) to make copies of, or take extracts from, books may be exercised on APRA's behalf by an authorised person.48 Paragraph 56(1)(c) Omit "the Commissioner", substitute "an authorised person".49 Subsection 56(2) Omit "the Commissioner" (first occurring), substitute "an authorised person".50 Subsection 56(2) Omit "the Commissioner" (second and third occurring), substitute "the authorised person". 51 Section 57 Omit "the Commissioner" (first occurring), substitute "an authorised person".52 Paragraph 57(b) Omit "the Commissioner" (wherever occurring), substitute "the authorised person".53 Subsection 58(1) Omit "The Commissioner", substitute "An authorised person". 54 Subsection 59(1) Repeal the subsection, substitute: (1) Powers under this Part may be delegated as follows: (a) APRA's powers may be delegated under section 15 of the Australian Prudential Regulation Authority Act 1998 ; (b) an inspector may, by signed instrument, delegate his or her powers to an APRA staff member, within the meaning of the Australian Prudential Regulation Authority Act 1998 .55 Subparagraph 60(2)(c)(iv) Omit "he or she", substitute "APRA or the inspector".56 Subsections 60(3) and (4) Omit "his or her", substitute "APRA's or the inspector's".57 Subsections 60(5) and (6) Omit "him or her", substitute "APRA".58 Subsection 60(7) Omit "he or she" (wherever occurring), substitute "APRA".59 Subsection 62(1) Omit "he or she" (wherever occurring), substitute "APRA".60 Paragraph 62(7A)(a) Omit "him or her", substitute "APRA".61 Subsection 62(7A) Omit "his or her", substitute "APRA's".62 Subsection 63(2) Omit "or Commissioner", substitute "or APRA".63 Subsections 63(4), (5) and (6) Omit "he or she" (wherever occurring), substitute "the Treasurer or APRA".64 Subsection 63(6) Omit "his or her" (wherever occurring), substitute "the Treasurer's or APRA's".65 Subsection 93(2) Omit "he or she", substitute "APRA".66 Part IX Repeal the Part.67 Section 113 Omit "the Commissioner", substitute "ASIC".68 At the end of section 113 Add: (2) The following provisions of this Act have effect, in relation to this section, as if references to APRA were instead references to ASIC: (a) subsection 115(1); (b) subsection 115A(6); (c) section 124.69 Subsection 115(1) Omit "him or her" (first occurring), substitute "APRA".70 Subsection 115(1) Omit "him or her" (second occurring), substitute "APRA or the person".71 Subsection 115(2) Omit "him or her", substitute "APRA".72 Subsection 115A(6) Omit "him or her", substitute "APRA".73 Subsections 124(1) and (1A) Omit "under the hand of the Commissioner", substitute "under APRA's seal".74 Subsection 124(2) Repeal the subsection.75 Sections 125, 126 and 127 Repeal the sections, substitute:125 APRA Act secrecy provisions apply Section 56 of the Australian Prudential Regulation Authority Act 1998 prohibits certain disclosures of information received under this Act.76 Paragraph 5 of the Schedule Omit "him or her", substitute "APRA". Part 2—Changing "Commissioner" to "APRA" (main amendments) 77 Amendment of the Act The provisions of the Act specified in this Part are amended: (a) by omitting "The Commissioner" (wherever occurring) and substituting "APRA"; and (b) by omitting "the Commissioner" (wherever occurring) and substituting "APRA"; and (c) by omitting " the Commissioner " (wherever occurring) and substituting " APRA ".Note 1: The headings to sections 34A, 44, 48, 48B, 49J, 49N, 51, 52 and 55 are altered by omitting "Commissioner " and substituting "APRA ".Note 2: The headings to sections 56 and 60 are altered by omitting "the Commissioner " and substituting "APRA ". 78 Subsection 3(1) (definition of quarterly statutory accounts )79 Subsection 3(1) (definition of yearly statutory accounts )80 Subsections 3A(1) and (2)81 Subsections 22(1), (4) and (5)82 Section 2383 Section 2484 Subsection 27(1)85 Section 2886 Subsections 29(1), (2), (3), (4), (5) and (6)87 Subsections 30(1), (2), (2A), (4), (4A), (5) and (5A)88 Subsections 31(3), (3A), (3AB), (3B), (3C) and (3D)89 Subsections 33(2), (3), (6B), (8) and (10)90 Subsections 34(1), (1A), (1C), (1D), (2), (3), (4) and (5)91 Subsections 34A(2), (3), (4), (5) and (8)92 Subsections 36(1), (2), (3), (4) and (6)93 Subsections 37(1), (2), (2A), (5) and (6)94 Subsection 40(5)95 Subsections 41(2), (3) and (5)96 Section 4397 Subsections 44(1), (2A), (3), (4), (6), (7), (7AA), (7A) and (9)98 Subsections 45(2), (3), (4) and (5)99 Subsections 46(1), (2), (3), (4) and (5)100 Section 48101 Subsections 48A(2), (4), (5), (6) and (7)102 Subsections 48B(1), (3), (4) and (5)103 Section 49104 Paragraphs 49B(1)(a) and (2)(a)105 Subsections 49C(2) and (3)106 Section 49D107 Subsections 49E(1), (2), (3), (6), (7) and (8)108 Subsections 49F(3), (4), (5), (7), (8) and (9)109 Subsections 49G(2), (5), (7), (10) and (12)110 Subsection 49H(5)111 Subsections 49J(1), (2A), (3), (4), (5), (5A), (6) and (9)112 Subsections 49K(2), (3), (4) and (5)113 Subsections 49L(1), (2), (3), (4) and (5)114 Section 49N115 Section 49P 116 Subsection 50(1) (paragraph (d) of the definition of prescribed person )117 Subsections 51(1), (2) and (4)118 Subsections 52(1), (1A), (1B), (1C), (2), (3) and (4)119 Subsection 54(1)120 Subsections 55(1) (other than paragraph (c)), (2) and (3)121 Paragraph 56(1)(a)122 Subsections 58(2) and (3)123 Subsections 60(1), (1A), (2), (3), (4), (4A), (5), (6) and (7)124 Subsections 62(1), (1A), (1B), (2), (3), (3B), (5), (7) and (7A)125 Subsections 63(1), (2), (4), (5), (6), (7), (9), (10), (11), (12), (13) and (14)126 Subsections 64(1) and (2)127 Subsections 93(2) and (3)128 Section 96129 Section 114130 Subsections 115(1) and (2)131 Subsection 115A(6)132 Subsection 116(1)133 Subsection 117(2)134 Subsection 118(4)135 Subsection 119(2)136 Paragraph 121(1)(c)137 Subsections 122(1) and (2)138 Subsections 123(1), (2), (3) and (4)139 Subsection 124(2)140 Subsections 129D(3) and (6)141 Section 130142 Section 132143 Subparagraphs 3(1), (2), (3), (4), (5) and (7) of the Schedule144 Subparagraphs 4(1) and (2) of the Schedule145 Paragraph 5 of the Schedule146 Subparagraph 6(4) of the Schedule147 Subparagraph 7(2) of the Schedule148 Paragraph 8 of the Schedule149 Subparagraphs 9(2) and (3) of the SchedulePart 3—Changing the administration of the Act (amendments to take account of Schedule 2 to the Insurance Laws Amendment Act 1998)150 Paragraph 70(3)(f) Omit "the Commissioner", substitute "APRA or an authorised person". 151 Division 3 of Part VII (heading) Repeal the heading, substitute:Division 3—General powers of APRA152 Subdivision A of Division 4 of Part VII (heading) Repeal the heading, substitute:Subdivision A—Inquiries and directions by APRA153 Paragraph 79(3)(c) Omit "himself or herself", substitute "itself".154 Paragraph 79(3)(d) Omit "by signed instrument", substitute "in writing". 155 Subsection 79(6) Repeal the subsection.156 Subsection 80(1) Omit "the Commissioner" (first occurring), substitute "APRA".157 Subsection 80(1) Omit "the Commissioner or the inspector may" substitute "an authorised person (if the investigation is by APRA), or the inspector, may".158 Paragraphs 80(1)(d) and (e) and subsections 80(2), (3) and (4) Omit "Commissioner", substitute "authorised person".159 Paragraph 81(2)(c) Omit "the Commissioner", substitute "an authorised person".160 After subsection 81(3) Insert: (3A) APRA's powers under subsection (3) to make copies of, or take extracts from, books may be exercised on APRA's behalf by an authorised person.161 Subsection 82(3) Omit "the Commissioner" (first occurring), substitute "an authorised person".162 Subsection 82(3) Omit "the Commissioner" (second occurring), substitute "the authorised person".163 Section 83 Omit "the Commissioner" (first occurring), substitute "an authorised person".164 Paragraph 83(b) Omit "the Commissioner" (wherever occurring), substitute "the authorised person".165 Subsection 84(1) Omit "The Commissioner", substitute "An authorised person". 166 Subsection 84(2) Omit "The Commissioner", substitute "The authorised person".167 Subsection 85(1) Repeal the subsection, substitute: (1) Powers under this Division may be delegated as follows: (a) APRA's powers may be delegated under section 15 of the Australian Prudential Regulation Authority Act 1998 ; (b) an inspector may, by signed instrument, delegate his or her powers to an APRA staff member, within the meaning of the Australian Prudential Regulation Authority Act 1998 .168 Subsection 86(4) Omit "his or her", substitute "APRA's or the inspector's".169 Subsection 86(8) Omit "he or she" (wherever occurring), substitute "APRA".170 Subsection 92H(2) Omit "the Commissioner's", substitute "APRA's".Part 4—Changing "Commissioner" to "APRA" (amendments to take account of Schedule 2 to the Insurance Laws Amendment Act 1998)171 Amendment of the Act The provisions of the Act specified in this Part are amended: (a) by omitting "The Commissioner" (wherever occurring) and substituting "APRA"; and (b) by omitting "the Commissioner" (wherever occurring) and substituting "APRA"; and (c) by omitting " the Commissioner " (wherever occurring) and substituting " APRA ".Note 1: The headings to sections 74, 77, 79, 92G and 92H are altered by omitting "Commissioner " and substituting "APRA ".Note 2: The headings to sections 81, 82 and 86 are altered by omitting "the Commissioner " and substituting "APRA ".172 Section 65173 Subsections 68(1), (2), (3), (5), (6), (7) and (8)174 Subsections 70(1), (2), (3) (other than paragraph (f)) and (5) 175 Subsections 74(1), (2) and (3)176 Subsections 75(1), (2), (3), (4), (5) and (6)177 Subsections 76(1) and (3)178 Subsection 77(1)179 Subsections 78(1), (2), (3) and (4)180 Subsections 79(1), (3) and (4)181 Subsections 81(2) (other than paragraph (c)), (3) and (4)182 Subsection 82(1)183 Subsections 84(4) and (5)184 Subsections 86(1), (2), (3), (4), (5), (6), (7) and (8)185 Subsections 88(1), (3), (4) and (5)186 Subsections 92D(4) and (5)187 Subsection 92G(1)188 Subsection 92H(1)189 Subsections 92K(4), (5) and (6)190 Subsections 92L(2) and (3)191 Subsection 92M(10)192 Subsection 92Q(3)193 Subsection 92R(3)194 Subsections 94A(1), (2) and (5)195 Subsection 96(2)196 Section 97197 Paragraph 121(1)(d)(5) Schedule 10, item 8, page 124 (line 2), omit "writing signed by him", substitute "signed writing".(6) Schedule 16, item 2, page 185 (line 1), omit "subsection", substitute "paragraph".(7) Schedule 16, page 205 (before line 5), before item 232, insert:231A Subparagraph 6(1)(a)(vii) Repeal the subparagraph, substitute: (vii) Part 13; and (viia) Part 14 (other than Division 2); and (viib) Parts 15 and 16; and231B After subparagraph 6(1)(c)(ii) Insert: (iia) Division 2 of Part 14; and231C Subsection 114D(2) Omit "the Commissioner", substitute "ASIC".(8) Schedule 17, page 207 (after line 14), at the end of the Schedule, add:Part 3—Amendment to take account of Schedule 3 to the Superannuation Legislation Amendment Act 1998 12 Subsection 63(3B) Omit "the Commissioner's", substitute "ASIC's".(9) Schedule 18, item 15, page 210 (line 2), after "(Excluded Funds) ", insert "Supervisory ".(10) Schedule 18, item 17, page 210 (lines 8 to 11), omit the item, substitute :17 Section 15DAA (definitions of basic levy amount and levy ) Omit "Superannuation Supervisory Levy Act 1991 ", substitute "Superannuation (Excluded Funds) Supervisory Levy Imposition Act 1991 ".(11) Schedule 18, item 38, page 212 (lines 11 and 12), omit "Superannuation (Excluded Funds) Supervisory Levy Imposition Act 1987 ", substitute "Superannuation (Excluded Funds) Taxation Act 1987 ".(12) Schedule 18, item 42, page 213 (line 11), omit "section 97 of".(13) Schedule 19, item 9, page 219 (line 22), omit "amended Act", substitute "old Act".(14) Schedule 19, page 228 (after line 23), after item 29, insert:29A References in instruments to Reserve Bank or ISC become references to APRA(1) APRA may, in writing, declare that a specified instrument that: (a) was made before the APRA commencement; and (b) contains one or more references to the Reserve Bank or to the Insurance and Superannuation Commissioner;has effect, from a specified date, as if all, or specified, references in the instrument to the Reserve Bank or the Commissioner were references to APRA.Note: An instrument may be specified by name, by inclusion in a specified class or in any other way.(2) A declaration under subitem (1) has effect accordingly.(3) In this item: instrument includes a document.(15) Schedule 19, page 230 (after line 29), at the end of item 34, add:(4) A reference in this item to an instrument in force includes a reference to an instrument that has been made but that is not yet in operation.(16) Schedule 19, page 232 (after line 15), at the end of Part 3, add: 37A Modified operation of item 27 of Schedule 2 to the Insurance Laws Amendment Act 1998Item 27 of Schedule 2 to the Insurance Laws Amendment Act 1998 has effect as if the reference to the Commissioner were instead a reference to the Commissioner or to APRA.It might help the opposition if I outlined these amendments. There are some additional government amendments to the Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 and I might address those all together to expedite matters. These amendments to the financial sector reform FSR bill are minor in nature and are a consequence of the identification of some minor errors in the FSR bill relating primarily to incorrect numbering and references that are no longer appropriate.Schedule 9 to the FSR bill is repealed and replaced with a revised schedule 9. This is necessary due to the delay in commencement of schedule 2 of the Insurance Laws Amendment Act 1998, which will now commence after the expected commencement date of the FSR. Further amendment will enable APRA, the Australian Prudential Regulatory Authority, to declare an instrument that will transfer powers of the Reserve Bank with respect to prudential matters to APRA from a date specified. Such a declaration might be necessary with respect to information memoranda, trust deeds and other commercial documents where at present the permission of the RBA is necessary before an action can be taken—for example, in the case where an organisation may seek to reduce capital.From the date that APRA commences, it is more appropriate for APRA, as the prudential regulator, to be responsible for these approvals. The amendments contain no new policy and simply ensure that the government's policy, as outlined in the bills currently before the parliament, is effectively implemented. The other additional amendments to the Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 are consequential upon those.13:25:003488Cook, Sen PeterSenator COOKRF4WAALP00—I have a question on R3 but I think we can wait until we come to that.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Crowley)—The sheet that I have in front of me contains amendments 1 to 16 exclusive of R3, then government R3 and then government 1.RF4Cook, Sen PeterSenator COOK—I am rising to indicate that the opposition will support these amendments.Amendments agreed to.13:26:003489Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I move:(R3) Clause 2, page 4 (line 23) to page 5 (line 7), omit subclause (13), substitute: (13) Items 231A to 231C of Part 8 of Schedule 16 commence: (a) immediately after the commencement of the Australian Prudential Regulation Authority Act 1998 if item 42 of Schedule 1 to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 1998 commences before the commencement of the Australian Prudential Regulation Authority Act 1998 ; or (b) immediately after the commencement of item 42 of Schedule 1 to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 1998 if that item does not commence before the commencement of the Australian Prudential Regulation Authority Act 1998 . (13A) Items 232 and 233 of Part 8 of Schedule 16 commence: (a) on the commencement of the Australian Prudential Regulation Authority Act 1998 if item 50 of Schedule 1 to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 1998 commences before the commencement of the Australian Prudential Regulation Authority Act 1998 ; or (b) immediately after the commencement of item 50 of Schedule 1 to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 1998 if that item does not commence before the commencement of the Australian Prudential Regulation Authority Act 1998 . (13B) Part 3 of Schedule 17 has effect only if the Australian Prudential Regulation Authority Act 1998 commences before the commencement of Schedule 3 to the Superannuation Legislation Amendment Act 1998 and, if so, Part 3 commences immediately after the commencement of Schedule 3 to the Superannuation Legislation Amendment Act 1998 .These are consequential amendments to the Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 . They appear on sheet 249, for easy reference. These government amendments contain a number of minor technical matters in relation to the proposed amendments to the FSR amendment and transitional provisions bill 1998 which have come to our attention. They are principally the result of the delayed proclamation of schedule 2 of the Insurance Laws Amendment Act 1998 and changes made to schedule 5 of the tax law bill No. 3.13:27:003489Cook, Sen PeterSenator COOKRF4WAALP00—I have a question arising from that. The explanation is of course comprehensible. The Taxation Laws Amendment Bill, originally No. 7 of 1997, renumbered No. 3 of 1998, has been carried by the Senate, but in doing so the government withdrew schedule 5, which related to choice of superannuation funds. That provision of the bill was taken out. It is my understanding that, while the government has either foreshadowed or introduced a Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 1998 into the House, there is no such thing at this point as a superannuation legislation amendment choice of superannuation funds act 1998.If I am correct, what we are being asked to do is to accept an amendment which relates to something that does not exist. From the point of view of the government, the government might say—I will not say it—that they have a reasonable expectation of coming into existence. I do not know what the view of this chamber is, but I think one of the reasons why in TLAB 3, when we debated it early this week, the government withdrew schedule 5, the superannuation choice of funds part, was that it may have been of a mind to expedite that bill for the other provisions in it. But it may also have come to a literate understanding of where the numbers were in this chamber as to whether this bill would pass through this chamber. My question is: am I right that this legislation does not exist yet? What is the explanation—and I am curious to know; I am not being combatant about this—that would be offered about amending a piece of at this stage non-existence legislation?13:29:003490Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—As I understand it, and my advice supports it, it is a commencement provision. It would only have any effect if that act were at some stage in the future to come into being. It is a bit like the Monty Pythonesque parrot. It is an ex-parrot at the moment. It is non-existent; it has ceased to be. We are not basing this on any reasonable or unreasonable expectation about the future of anything called an act to do with choice of super funds. It just means that, if it does happen to come about, this creates a trigger and a commencement.13:30:003490Cook, Sen PeterSenator COOKRF4WAALP00—Thank you for that explanation. Therefore, if an act materialises—that is, this act—then this provision has effect. If an act does not materialise, then at some future stage I would imagine that the government, when cleaning up its legislation, would remove this from the legislative list. Certainly any lawyer or student of law looking for this, if it were not to come into existence, would wonder what it was referring to and, indeed, on a plain reading so would everyone else. That explanation is accepted by the opposition. We support this amendment.Amendment agreed to.13:31:003490Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I move:(1) Schedule 16, heading to Part 8, page 205 (lines 2 to 4), omit the heading, substitute:Part 8— Amendments to take account of Schedule 1 to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 1998This is simply a change in the heading relating to that matter about which we just had the interchange regarding the choice of super funds act 1998.Amendment agreed to.13:32:003490Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move:(1) Clause 2, page 2 (after line 26), after subclause (4), insert:(4A) Part 3 of Schedule 4 is taken to have commenced on 3 May 1998.(2) Schedule 4, page 80 (after line 2), at the end of the schedule, add:Part 3—Liability for debts or liabilities of a related body corporate48 After Division 6 of Part 5.7BInsert:Division 6A—Liability of a company for the debts or liabilities of a related body corporate588YA Liability of a company for the debts or liabilities of a related body corporate(1) On the application of the liquidator of a company that is being wound up in insolvency, the Court may, if it is satisfied that it is just, order that a company that is or has been a related body corporate must pay to the liquidator the whole or part of the amount of a debt or liability of the first-mentioned company that is an admissible claim in the winding up.(2) In deciding whether it is just to make an order under subsection (1), the matters to which the Court must have regard include: (a) the extent to which the related body corporate took part in the management of the company; (b) the conduct of the related body corporate towards the creditors of the company generally and to the creditor to which the debt or liability relates; (c) the extent to which the circumstances that gave rise to the winding up of the company are attributable to the actions of the related body corporate; and (d) the extent to which the insolvent company has, at any time, engaged in one or more transactions which have resulted in the value of the insolvent company's assets being reduced; and (e) any other relevant matters.(3) An order under this section may be subject to conditions.(4) An order must not be made under this section if the only ground for making the order is that creditors of the company have relied on the fact that another company is or has been a related body corporate of the company.I am dealing here with what can be broadly referred to as the Patrick amendments. They arise with some urgency because of the requirement that our financial sector, our business sector and, indeed, our employee sector be protected from practices which would otherwise be very dangerous if they were allowed to continue.You will note that item 1 provides a date by which this is to have commenced, and it refers to the date 3 May. I have followed the practice of the government and of the former Labor government of relating the amendment back to the date of a press release, in case of companies taking advantage of the situation between knowing of such an amendment coming up and the amendment becoming law to exercise what I may refer to as devious practices. That is the significance of the date 3 May 1998.The substantive amendment is that on item 2, and it refers to the liability for debts or liabilities of a related body corporate. We are concerned here with entities structuring themselves in such a way as to avoid liabilities or responsibilities by interposing companies with little capital backing between creditors, employees and the companies within the group which have substantial assets.This is not a new problem. In 1988 the Law Reform Commission conducted a general insolvency inquiry. As a part of that inquiry, the commission considered the possibility of making related companies liable for the debts of an insolvent company in certain circumstances, and the commission recommended that companies should be so liable. A draft section D13 was produced. That draft section is a relatively simple one which essentially hands a discretion to a court to order a related company to contribute an amount to the debts of the insolvent company on its winding up.In its considerations the Law Reform Commission—and for the purposes of Hansard, I am referring to pages 146 and 147 of that report—reported as will follow. I ask for the Senate to bear with me, because I think what they said is worth repeating at length so I will quote all the way through. The quote is as follows:Liability for debts or liabilities of a related company334. Relaxation of separate entity principle . Although this topic of liability for debts or liabilities of related companies does not strictly fall under the heading of director liability and disqualification, it is similar in that it deals with the imposition of liability on persons who have been closely connected with the running of the company but who would ordinarily be protected from being required to contribute to the amount available for distribution in the winding up. Under the existing law, the separate personality of each company prevents access to the funds of one company for the payment of the debts or liabilities of a related company except where the debtor company is a shareholder or creditor of the related company. This may operate unfairly where the business activity of a company has been directed or controlled by a related company. It is as though the related company was acting as a `director' of the other company and causing it to incur debts and liabilities.335. Proposal in DP 32 . In DP 32 (para 222) the Commission proposed to give the court a wide discretion to order that a company that is or has been a related company pay to the liquidator all or part of an amount which is an admissible claim in the winding up `if it is satisfied that it is just'. Three specific criteria to which it was proposed the court may have regard were. the extent to which the related company took part in the management of the company. the conduct of the related company towards the creditors of the company and. the extent to which the circumstances that gave rise to the winding up of the company are attributable to the actions of the related company.It should not, of course, be sufficient that creditors have merely relied on the assets of the related company in their decision to deal with the company.336. Assessment and recommendation. The Commission's proposal was supported by several submissions. One submission, from the Law Council of Australia, strongly opposed the proposal on four grounds.. Separate entity principle. The Council said that it is a fundamental principle of company law that separate companies have separate legal entities. However, as a matter of policy, the Commission sees no reasonable objection to recommending the imposition of liability where a parent company permits its subsidiary to incur debts when insolvent. . Project financing. The Council argued that financing for large resource and other projects needs to be done on a limited recourse basis, but that, under the Commission's proposal, it would not be possible for a parent company to satisfy itself that it would not be liable for the debts of the project. However, the fact that creditors have entered into contracts on a limited recourse basis would be one of the `other relevant matters' to which the court is required to have regard.. Uncertainty. The Council said that the uncertainty in commercial dealings that would be created by the wide discretion given to the court would be undesirable. Lenders would be unable to ascertain the true liabilities of parent companies and could be expected to assume that at least some unguaranteed liabilities of subsidiaries should be taken into account. However, persons lending to the parent of a group of companies have regard not only to its balance sheet but to the consolidated balance sheet of the group and generally take cross-collateralised security. The Commission does not accept therefore that the suggested uncertainty would follow from its proposal. Moreover liability for a subsidiary's debts otherwise than under a guarantee would only arise in the context of the Commission's recommendations where that subsidiary was or became insolvent.. Accounts. The Council suggested that auditors and company directors would have enormous difficulty in producing accounts which represent a true and fair view of a parent company. However, the Commission does not accept that accounting difficulties are sufficiently serious to deter it from recommending the imposition of liability on a parent company which has permitted its subsidiary to trade while insolvent.Accordingly, the Commission recommends that companies be liable for the debts or liabilities of related companies in the manner set out in D13.I have quoted at length to make sure that it is clear in the Hansard what the recommendations of the Law Reform Commission were. It went on in fact to outline, in what it refers as section D13, the way in which this section should be structured. I have stuck as faithfully as I can to the section that the Law Reform Commission laid out, partly because there is no sense in reinventing the wheel but also because it had obviously carefully considered the matters and weighed the manner in which it should be presented.I say `as carefully as I can' because I have had to add one section. That is the section which is item 2(d) on sheet 1006. That arose because of the following. Senators would be aware that this occurrence has occurred in three specific instances recently in relation to employee entitlements and that is what is known as the Woodlawn, the Cobar and the Patrick examples. Of course the attention, quite rightly, has been focused on the awful consequences of employers evading their responsibilities through structuring their affairs in such a way that they can escape them.While it is true that the Woodlawn, the Cobar and the Patrick examples all relate to employee entitlements, proposed section 588YA will inure for the benefit of all creditors, including those who have judgment debts against the insolvent company as a result of proceedings taken under sections 51AA, 51AB or 51AC of the Trade Practices Act or the franchising code of conduct or any other of the state based retail tenancy legislation for that matter.Now you are pricking up your ears and you are saying, `Now he's referring to creditors and, not only is he referring to creditors, he is actually referring to matters that affect small business.' I was alerted to this by a letter I got from an organisation which indicated the real danger. I will quote from that letter but I do not choose to give you the source. The letter said:I consider that your proposed amendments—because I had circulated these, as I told you, on 3 May—may also have a wider application to the recent fair trading package in that franchises and shopping centre owners could establish corporate shells to run various business enterprises. Should a franchisee or a retail tenant in a shopping centre ultimately be successful in court proceedings against a business enterprise concerning unconscionable conduct, an award for damages may not be effective if the entity has no assets or puts itself into voluntary administration. The establishment of such corporate structures would, of course, defeat the fair trading reforms.Those are important points because, regardless of what your political perspective is, I would be surprised if any senator in any political party would actually relish the thought of companies being able to avoid their obligations to suppliers, banks, landlords, tenants and customers as well as to employees through the restructuring and the deliberate manipulation of their corporate structure to avoid their obligations. I think this kind of legal and accounting spivery should be stamped on by the parliament. It should be stamped on so forcefully that these people will realise that we will not put up with what is immoral and should be illegal.I do not know why, and I have not inquired into the reasons why, that particular Law Reform Commission recommendation is not yet in law, but I do think it is time we redressed that problem. I would seek, because I do regard it as an urgent matter, the urgent support and the full support of the Senate in stamping this out. It has much reference to recent events, but it really is part of a far broader problem and a far bigger picture. I therefore commend these two amendments to the Senate.13:45:003493Cook, Sen PeterSenator COOKRF4WAALP00—The Labor Party will support the Democrat amendments that have just been moved by their spokesman Senator Murray. We emphatically support what he has said; in fact, we are so enthusiastic about it we wish to amend them to make them what is, in our view, stronger. I will come to that in a minute.Mr Chairman, on the running sheet it appears that the next amendments to be moved are ones by the Labor Party to Senator Murray's amendments. It may expedite the proceedings of the chamber if I were to seek leave to move those amendments now. I notice that Senator Murray has nodded in the affirmative.Leave granted.RF4Cook, Sen PeterSenator COOK—I move:(1) Subsection 588YA(1), omit "On the application of the liquidator of a company that is being wound up in insolvency,", substitute "On the application of the liquidator or a creditor of a company that is being wound up in insolvency, or on the application of the Commission,".(2) At the end of Schedule 4, Part 3, add:49 Section 1317HD Repeal the section, substitute: 1317HD Recovery of profits, and compensation for loss, resulting from contravention (1) Where a person contravenes a civil penalty provision in relation to a corporation, the corporation, a creditor or the Commission may recover from the person, as a debt due to the corporation: (a) if that or another person has made a profit because of the act or omission constituting the contravention—an amount equal to the amount of that profit; and (b) if the corporation has suffered loss or damage as a result of that act or omission—an amount equal to the amount of that loss or damage; whether or not: (c) the first-mentioned person has been convicted of an offence in relation to the contravention; or (d) a civil penalty order has been made against the first-mentioned person in relation to the contravention. (2) Proceedings under this section may be begun only within 6 years after the contravention.I wish to speak briefly to Senator Murray's amendments and my amendments to his amendments. In Senator Murray's amendments the words `on the application of the liquidator' appear. The distinctive difference that our amendments seek to bring is to extend that to include as well a creditor of a company and the commission—they are two separate entities. The commission in this case refers to the ASC or, as it will become, the ASIC. The reason I do so is for very much the same reasons as have been very well articulated by Senator Murray. However, I would like to address the Senate on them for a moment so that the position of the Australian Labor Party is very clear.This amendment is known in my office as the `Patrick amendment' and for good reason. Senator Murray has pointed out that that is a classic and recent case in which a company has stripped its assets from a particular company that engaged employees and returned those assets to the principle company, in this case Lang Corporation, and those employees found themselves to be employed by a company simply as an employee entity without rights to recover their entitlements to pay, annual leave, long service or any other award rights or entitlements that they had.It was a case that gained national notoriety in the waterfront dispute. It was not, as Senator Murray has said, the only or an isolated example of this sort of behaviour. In Woodlawn and Cobar there were examples of similar practices being engaged to procure the insolvency of a company, drive it into bankruptcy and leave the workers of that company stranded without being able to obtain their rights to pay or other award entitlements. These amendments would close off that type of ability and therefore are desirable in company law. These amendments are also socially desirable and they protect the interests of workers in an employment situation where the artificial arrangement of corporate affairs occurs that creates that end result.As Senator Murray has said, and I concur, this was not an isolated example; there are others. What is disquieting to me is that, in the midst of the public revelations about how Patrick was asset stripped—once the news broke about how Patrick had confected this artificial concoction—an article appeared in the Australian Financial Review—I do not have it to hand but it is well referenced—which reported that a senior Australian law firm had been inundated by inquiries by various employers about how other companies should do it as well. We have on the record three major corporations in Australia engaging in this practice and by virtue of that article and anecdotal evidence we know that there is interest more widely spread in the corporate community about how this might be done so that they too can take advantage of this issue.It is therefore appropriate for the parliament to move decisively to close down this type of what can only be described as `employment rort'. Quite apart from the industrial relations elements of this there are other good reasons in corporate law why it should be done.I want to take the time of the chamber for a few minutes to put down clearly and quite explicitly why these amendments will operate in the way in which I have said and to explain the nature of the scam that was followed in the case of the Patrick company.The Patrick companies, which employed the labour within the Patrick group—and there were four of them—were stripped of their assets. Most of these assets went upstream to other companies in the Patrick group. The only significant asset left with the Patrick employing companies was a contract to supply labour to the rest of the Patrick group. This has a provision, which the administrators describe in their report as `onerous', which provided that if there were any interruption to the supply of labour by, for example, industrial action, the Patrick group could terminate the labour hire contract and therefore obtain their labour from another source.These changes in the Patrick corporate structure were made without the knowledge of the work force. That is a significant point. No worker was consulted on this; it happened in secret. They did not know that they were actually employed by companies that were little more than $2 registered companies and they did not know that their contract to supply labour to the Patrick group could be terminated on such easy grounds.When Patrick terminated their entire work force of 1,400 workers, they relied on this new structure. The Patrick group determined the grounds had been made out to terminate the labour hire contracts with the Patrick employing companies, and these contracts were terminated. The Patrick group was free to hire labour from other sources, which they did; hiring labour from the NFF and P&C Stevedores. At the same time, the Patrick employing companies were placed in receivership, having lost their only significant asset: the contract to supply labour to the Patrick group. The employees of the Patrick labour hire companies were, as a result, basically left without their two most important rights. Any claims to secure entitlements like annual leave, sick pay, redundancy pay and long service leave could only be made against their direct employer, the $2 company—Patrick's employing companies, now in receivership. Their right to be protected against unlawful termination was rendered meaningless.The workers could only be reinstated to their direct employer, the Patrick employing companies, but those companies were in receivership and, in any event, the Patrick group would be under no obligation to take labour from those companies. A reinstatement is therefore of no practical effect even though it was clear that they were sacked illegally, and that is because they were members of a union.The government has tried to say that the circumstances of the Patrick corporate scam were unique. That is plain wrong. Any corporate group could organise their structures so that employees are employed by internal labour hire companies with a tenuous agreement to supply labour to the rest of the group. Indeed, many corporate groups, for quite legitimate reasons, already have separate companies within the group and employ the labour just as separate companies own the assets, own the land, hold the debt or hold the tax losses. A corporate group could easily alter this structure so that they could do what Patrick have done.Any employee who is employed in this sort of structure is effectively without any job security at all. They have a legal entitlement to redundancy pay, long service leave, accrued holiday and sick pay, but that is only enforceable against a company which is only a $2 company. There will be no assets to provide these entitlements on termination. They have a legal right not to be sacked illegally, but any reinstatement order is only enforceable against the direct employer which may not have worked to provide to the employee. That is why the bill introduced in this chamber as a private member's bill by Senator Mackay, and the amendments that I have moved are important.The Patrick scam could happen to anyone. Any employee could be left without an effective means of being reinstated to their job or getting their accrued legal entitlements. Labor's amendments to the Democrats' amendments here today ensure that this cannot happen again. It gives employees a measure of job security. It does so by making amendments to the Corporations Act.The two amendments to the Corporations Act are as follows. The first amendment provides, where a company is in receivership, that the court can make an order requiring a related company to pay the debts of the other company, including debts owed to employees like accrued entitlements. The requirements for liability of the related company in this case are also somewhat different. The matters which the court will take into account in determining whether to make an order are as follows: the extent to which the related company took part in the management of the employer; the conduct of the related company towards the creditors of the company generally, and to the creditor to which the debt or liability relates—that is, the employees; the extent to which the circumstances that gave rise to the winding up of the employer are attributable to the actions of the related company; and any other related matters. Again, this provision will give greater security to employees in relation to their accrued legal entitlements.The second amendment will give creditors the right to bring proceedings for the recovery of debts against directors of companies acting in contravention of the Corporations Law. At present, the only company, usually the liquidator or receiver, has this right. Under this provision, creditors such as employees will be given the right. In the Patricks case it would mean that employees of the Patrick companies, not just the receivers, would have the right to sue Chris Corrigan and other Patrick directors for debts arising from breaches by them of the Corporations Law.Those are my supporting arguments for the amendments that I moved. We will be supporting the Democrats' amendments. We hope the chamber will support our extension of those amendments.13:57:003495Murray, Sen AndrewSenator MURRAY3M6WAAD00—The Democrats will accept the opposition's amendments to our amendment.13:57:003495Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I will make some brief comments on these matters. I know they are extremely important to the labour movement. I appreciate the way in which the debate is being handled because the passage of the so-called Wallis package is very important to the government.Without going into the policy issues at length, the policy issues were, I might say, dealt with by the Harmer report not so long ago; a report that was given to the previous government on these very issues, these subsidiary and insolvency issues, which are directly comparable with Cobar and Woodlawn. The previous government made a decision to come down with the stand that we now have, so they made a deliberate policy decision there. That is not to say that it is not time to review these issues. The Labor Party has made that decision and it may indeed prove to be the right decision.One of the things that the structure of the Corporations Law in Australia post-1990 requires—particularly these sections of the Corporations Law—is ministerial council approval for any proposal. It was the process that I described during the second reading debate on this package that did indeed delay a number of the amendments that we have considered. Obviously, in a federation the processes where you have ministerial council structures which were put in place by the previous government—and supported by us—ensure that the states get a say in these matters.Dealing with the amendments in the way that is proposed today will be in breach of the corporations agreement. However, can I say on the constructive side that these matters have already been brought before ministerial council by one of its members—indeed, the Attorney-General for New South Wales, Jeff Shaw, which will be a nice surprise to members opposite—so they will have to be dealt with by the ministerial council. That is the appropriate way for them to be dealt with. I do not intend going into any more detail on the detailed provisions which are the subject of the Democrats'—and now amended by Labor—amendments. The coalition will oppose them and clearly the people in the other place will have to make a decision if the Senate does indeed pass them.13:59:003496Mackay, Sen SueSenator MACKAY9L6TASALP00—Just to make some additional comments to support those made by Senator Murray and Senator Cook, I go to the private member's bill which is before us, moved in my name in the Senate and in the name of Bob McMullan in the House of Representatives. I would like to say that I agree wholeheartedly with the comments of Senator Murray when he says, `Now is the time to deal with this matter expeditiously.' This is really the first opportunity we have had, since the unfortunate events where 1,400 people were sacked, to attempt some remedial action with regard to this and to attempt, in legislation, to take some action whereby this sort of activity cannot happen again.I would just like to say that the very day that the 1,400 Patrick workers were sacked we had some very unedifying spectacles, both in the House of Representatives and in the Senate. In fact it was quoted by the media as `gloating and gleeful' activity and behaviour from members of the government. I had to speak on it the next day and I found utterly distasteful the sight of anybody at all in Australia, let alone members of the government, let alone ministers of the Crown, taking a clear personal pleasure in the sacking of 1,400 workers.I have to say that it was a very emotional day for us on this side of the chamber when we spoke about this in great depth the next day. The irony was not lost on me that at the same time as the government was expressing concern for the workers employed at Cobar and the workers employed at Woodlawn, saying this was dreadful, that they did not support it and they would go out of their way to ensure that benefit would flow on and so on—although it took a considerable amount of time for that matter to be sorted out—certain members of the government were clearly involved in or knew of the asset stripping activities of Patrick and were being advised by senior public servants as to how this could happen in terms of the replacement of the Patrick work force with an entirely new work force. So it was a very unedifying spectacle. I think that the government's comments with regard to Cobar and Woodlawn seem in retrospect to be hypocritical in the extreme and it really is not the sort of thing that we want in this country.I would like to say that if this type of activity had been conducted by a trade union in this country there would have been absolute mayhem on the government benches. There would have been calls for, if not immediate action in relation to, the deregistration of the union that was involved in any activity that was comparable with what Patrick did. This government has come down on unions like a ton of bricks—and so has the ACCC, headed by Allan Fels—where they have regarded them as improper in terms of free flowing business.We have a situation where the government has let business get away with this. The government has not only let business get away with it, it in fact conspired—this is a case that the government will claim is sub judice and we will have an argument about that in the next few weeks—to ensure that this could happen. So it has not simply been passive, simply doing nothing, it has been proactively working with a company to ensure that this could happen.This, in modern day Australia, is absolutely outrageous. But, it does not stop there. We also have a situation—and I would like to talk to the Senate about this—whereby this type of practice has in fact been replicated in one of the government's own agencies. I refer here to Employment National. The minister owns eight out of the 10 shares of Employment National. When the Employment Security Bill 1998 was introduced into the Senate it was very clear that the government at that point intended to ensure that the jobs of the CES workers would be transferred into the new Employment National with the usual rights with regard to long service leave and using the GECA award in terms of the no disadvantage test.What happened was that the opposition and the Democrats were successful in moving a number of amendments with regard to that bill. What happened? Senator Vanstone pulled the bill and we have not seen it since. We have only to look at the consequences of that attempt to institute the types of changes that were incumbent within that bill, but without legislation, to see that has created a whole series of problems for the government that are coming to light now.But the critical thing with regard to those CES workers who have lost their jobs with the abolition of the CES is that they were under the clear understanding in terms of the whole process that they would be given the option, first, of voluntary redundancy—which is fair enough; that is an accepted public sector practice—or, second, transferral to the new Employment National. In relation to what conditions they would be employed under in the new Employment National, we had a discussion at the estimates round before last with the employment advocate as to what he would use in order to ensure the no disadvantage test was properly applied.Prior to the employment advocate's appearing at estimates, workplace relations officials had advised the Senate committee that the GECA award would not be used with regard to the application of the no disadvantage test, that there was no relevant award because Employment National was a new company. When the employment advocate appeared in front of the Senate estimates committee, we asked him what he would be using. He said that, quite clearly, the GECA award was the appropriate benchmark to use with regard to the application of the no disadvantage test. So the government and Employment National were caught between a rock and a hard place with regard to ensuring that these people did not experience any diminution of their conditions.What happened subsequent to that? Employment National set up a labour hire company; that is what happened. So you have got Employment National operating and you have got an Employment National labour hire company. Now Employment National, the government owned organisation for the delivery of employment services in this country, is saying, `Sorry, we don't employ the CES workers. We don't directly employ anybody. It is the labour hire company that employs them.' Therefore, there is no direct nexus between the GECA award and the conditions of the CES workers and the people who are going to be picked up by Employment National. They will be employed by this other company.There is a personnel link between Employment National and Patrick. I am not suggesting that this necessarily has any genuine significance, and I do not intend to cast aspersions on this person at this stage, but Peter Storey, who heads Employment National, used to work for Patrick. With regard to the changes that Employment National is currently going through—and has been taken to court on by the union, incidentally—there seems to have been a change of tactic when Mr Storey came on the scene. I am not sure whether that is coincidence or whether it is, in fact, premeditated. It is the matter of a court case at the moment and it is something about which we will have to wait and see.But the reality is that those CES workers who have been offered employment with Employment National have been told that to get that employment they have to sign an AWA or they will not get the job. These are CES people who are employed under the Public Service Act and whose conditions were determined by GECA. They have been told that, in order to secure any future employment whatsoever, they are going to be forced to sign an AWA, to their own severe disadvantage with regard to the diminution of their wages and conditions.So it is not simply in the corporate sector that this is happening. It is simply not good enough for the government to come along here and cry crocodile tears about the Cobar workers and the Woodlawn workers. The Employment National situation is happening in the government's own backyard, with the complicity and the full knowledge of the government, in a company owned by the government. If we cannot trust the government owned enterprises not to do this, how on earth can we have any confidence with regard to the corporate sector? That is the point. It is all very well for the parliamentary secretary to come in and say, `This is a matter that needs to go to ministerial council' or whatever, and `Yes, there may be some merit in this.'I say to the government that if it genuinely has a concern about what happened to the workers at Cobar and Woodlawn—and we know the government does not have any concern for what happened to the workers at Patrick Stevedores—then why not do something about fixing up what is happening in its own backyard with regard to Employment National? Let us ensure that there is a proper corporate structure with Employment National. Let us ensure that the ex-CES workers, or whoever, are in fact employed directly by Employment National, not by a labour hire company which allows Employment National to deliberately get out of commitments that it otherwise would have with the transfer of people from the public sector.I say to the government that not only is it grossly hypocritical not to support the amendments moved by Senator Murray and Senator Cook with respect to the corporate sector, but also it is being grossly hypocritical in terms of the corporate structure of Employment National. If the government chooses not to support—and clearly the parliamentary secretary has indicated that it will not—the amendments moved by Senator Murray and Senator Cook, at least it should do something about what is happening now in its own backyard with Employment National.Returning to the substance of the amendments that are attempting to provide security for Australian workers, I am very distressed to hear—I did not see the article that Senator Cook alluded to in the Financial Review—that a law firm has been inundated with requests. This is something that has to be actioned now. This is something that cannot wait for a time whereby it is convenient for the government to deal with it. In terms of what Senator Cook advised the Senate, clearly this type of behaviour is happening right throughout Australia in the corporate sector.What are we going to do? Are we going to wait until there is a plethora of Patrick style labour hire companies all over the country—or Employment National style labour hire companies—so that we have a repetition of a Cobar situation, a Woodlawn situation or a Patrick situation, before we act? Is that what the government is seriously asking us to do? Or can we do what Senator Cook and Senator Murray are proposing and carry these amendments now to ensure that such activity is clearly not legal?We have in front of us four examples of where this type of activity has occurred: Cobar, Woodlawn, Patrick and Employment National. The latter two—there is absolutely no doubt in anybody's mind—knew precisely what they were doing. They deliberately used provisions in order to ensure they were able to, in the Patrick case, sack an entire work force—illegally, as it transpired, although it was clearly illegal to us at the time—and in Employment National's case to ensure that it can shed and shirk its responsibilities to workers who will be employed by it.I say to the government: let us not wait for several years for more and more of these companies to go bust and not allow their workers their due entitlements. Let us do something about it now by ensuring that this sort of situation does not happen in the future. I reiterate that if the government is genuinely concerned about this type of corporate structure one of the first things it should do is fix up its own backyard and do something about Employment National.14:14:003499Cooney, Sen BarneySenator COONEYSF4VICALP00—This amendment deserves to be supported. It is a pity that such an amendment has to be suggested. There is always a danger of romanticising one's youth, but in my days—if I can use that expression—people were not inclined to ask if something was legal in the way that the people advising Patrick may have asked, but the question was: did it pass the smell test? What was meant by the smell test was that it might be legal, but, if it was not ethical, honourable or fair, then you should not do it.One gets the feeling that those who advised Patrick planned and plotted a course for it to take. It is perhaps the most dramatic example, but by no means the only example, of lawyers advising at the insistence of their client—and perhaps suggesting to their client in some cases—how they can construct things so as to avoid their real moral obligations.Senator Murray has—no doubt with some regret—had to move this amendment. On many occasions he has spoken on corporate law in this chamber, and in his practice in that field he certainly would not have done anything that did not pass the smell test. It has not only occurred in Patrick's case, or in the examples given by Senator Mackay in her excellent speech, but it has also occurred in the meat industry where again and again abattoirs have closed down and left people unpaid.Within company law there is that proposition that directors owe a duty to the company and to the company only. There was the old case of Foss v. Harbottle in about 1843.3L6CONROYSenator Conroy—You will have to explain that one to me.SF4Cooney, Sen BarneySenator COONEY—The senator would know that case, no doubt. There has been a movement away from that. In legislation we are about to consider, the Company Law Review Bill 1997, the government has seen the virtue of moving away from the Foss v. Harbottle decision, because it says:A company's legal capacity to do something is not affected by the fact that the company's interests are not, and would not be, served by doing it.That suggests that the government understands the need to counter situations such as that presented by the Patrick case. Although those who are advising Patrick might say it is in the company's interests to do what it did, nevertheless there are wider obligations that they should attend to. Indeed, its reputation would be much better had it acted differently, and had it and many other companies not made necessary the amendments put forward by Senator Murray.Senator Ian Campbell said quite rightly that this is a national scheme and there are problems caused by that. I do not think that should stop us progressing this and expressing our opinion that this is a matter that needs to be dealt with rapidly.I will quote a passage from the classic work on corporations, The Modern Corporation and Private Property. No doubt this has been read by members of the chamber. It was written by Berle and Means. It was first issued in 1932, so it has been around for a while. I will quote this passage:Corporations have ceased to be merely legal devices through which the private business transactions of individuals may be carried on. Though still much used for this purpose, the corporate form has acquired a larger significance. The corporation has, in fact, become both a method of property tenure and a means of organising economic life. Grown to tremendous proportions—and this is in 1932—there may said to have evolved a `corporate system'—as there was once a feudal system—which has attracted to itself a combination of attributes and powers, and has attained a degree of prominence entitling it to be dealt with as a major social institution.The phrase that there is now a corporate system as there was once a feudal system is a very powerful one. This was written well over 60 years ago and the position has got even worse. Large corporations do control their workers—and I use the word `control' advisedly—as if this was a feudal system. It was a feudal action in the most dramatic of cases, that is, the Patrick case, but this feudal system is the system that corporations use in many situations.While taking on board what Senator Ian Campbell said, I think that the present situation needs to be remedied and needs to be remedied quickly. Senator Cook and Senator Murray have put forward a most timely amendment.14:21:003500Conroy, Sen StephenSenator CONROY3L6VICALP00—I wish to follow up the contributions from Senator Cooney and Senator Mackay. Not that long ago the Cobar and Woodlawn workers were camped on the lawns outside Parliament House. They had a sad and sorry story to tell about how corporate spivvery had taken hundreds and thousands of dollars of their own entitlements. It was nothing special: nothing more than their long-service leave; nothing more than their accrued holidays; and nothing more than their superannuation.By a little bit of corporate spivvery, a bit of asset stripping, they had been left with nothing. I think there might have been $9 million in the case of one. For many days the government refused to even acknowledge their presence on the lawns. They were sad days for Australia. After some media attention and persistence from the workers, who were not prepared to be ignored, eventually a delegation got to meet with the Prime Minister. He promised not a great deal to give them hope, but at least he listened. He talked about reviewing the situation.A few weeks later we saw Patrick Stevedores move in with the dogs and the balaclavas, and it became clear that the Prime Minister—as on the GST when he said `never ever'—really was crying crocodile tears with those workers. We have seen a similar situation—as Senator Mackay has so eloquently outlined—with Employment National. Here is a government that wants you to believe it cares, that wants you to believe that it is for the battlers, that wants you to believe that it is prepared to make sure that workers' entitlements are protected, that promised Australian workers before the last election that nobody would be worse off. Well, there are a few workers at Cobar, Woodlawn, Employment National and, more importantly, at Patrick, who have been made a heck of a lot worse off. You could almost be forgiving of it, if it were simply the corporates doing this but, as Senator Mackay said, the government has been doing it itself. So when it says to the workers that the Prime Minister met with, `We are looking at it', it is true that it has been looking at the issue but it has been looking at how to refine it and do it better.We have seen the government willing to spend taxpayers' money in a guarantee to Patrick to get them to sack the entire union work force. This was the end of real job security. A lot of battlers in Australia are worried. You do not have a job for life any more. Many organisations, both public and private, do not have a culture any more of `You start work here when you are 18, you finish when you are 65, and you work for the one company all your life.' That is a thing of the past. In the last election campaign the Prime Minister promised workers that they would have job security, and he gave them every indication that he was willing to have a look at these sorts of issues. Today is the `put up or shut up' test. Today the government can accept the Labor Party's amendments and put into action right here what it told those Cobar and Woodlawn workers it was prepared to look at.I say to Senator Campbell—through you, Madam Temporary Chairman—that we accept that the states have a role to play, that this is a federation. But what you are seeing, report ed in the Financial Review, as Senator Cook has mentioned, is a flood of interest in copying these proposals, this legal spivvery that has taken away ordinary workers' conditions and rights. Yes, we do need support from the states, but we need leadership from the federal government—something that is lacking in a lot of different areas. Here is the chance to strike a blow for the battlers. Here is a chance to say, `We accept that this sort of corporate chicanery cannot go on.'The angst felt by those families can be redressed in a small way. There is not a lot this legislation can do for those it has already happened to—I do not believe we are proposing a retrospectivity aspect to it. Here is a chance to make sure that it cannot happen again because, if you, as members of the government, reject this amendment, every time it happens it is on your head. You have the capacity to accept this amendment and put pressure on the states, as you do in any set of circumstances. But each time another worker appears in the newspaper or on A Current Affair or anywhere else and they have had their super, their leave loading or their long service entitlements taken—because a company has been involved in asset stripping or has established the mechanisms to take from their workers what is not theirs to take—it is on your head if you reject these amendments.You cannot cry the crocodile tears you cried a few weeks ago over Cobar and Woodlawn. At the time I thought it was pretty funny that the Minister for Workplace Relations and Small Business, Mr Reith, and John Sharp and others took up the case on behalf of some of those workers. They were prepared to stand up publicly and support them. But at the same time, Mr Sharp, when he was Minister for Transport and Regional Development, was setting this in motion. Peter Reith cried crocodile tears about the workers—how he would be willing to look at it and how it was terrible that it had happened—and all the time they were working away behind the scenes to take away workers' rights.I would like to talk about the smell test that Senator Cooney discussed. The government set itself up to work with Patrick—that is, Chris Corrigan and Peter Scanlon. The latter is an old favourite of mine. I have spoken quite often now on Peter Scanlon and his role through the 1980s in two of the biggest six corporate scams that have ever taken place. That is not something I have alleged; that was said by the National Companies and Securities Commission, which went on to become the ASC, the corporate watchdog. They said, `These are the big six scams that happened in the 1980s. These are the real spivvy performances'. And Peter Scanlon was up to his neck in two of them.I will not spend too much time on the Elders H fee, Swiss bonds and VicInvest, to name but three of the transactions that Elders was involved in, that Peter Scanlon was the corporate brains behind. John Elliott gets a lot of the publicity because he is larger than life. But the real brains, the corporate strategist, behind what went on at Elders was Peter Scanlon. He would not pass Senator Cooney's smell test in a million years. Yet this government decided it was going to get into bed with one of the biggest corporate spivs in this country when it decided to back Corrigan and Scanlon.I have talked before about the whole corporate scam behind the Swiss bonds. That is still under investigation by the National Crime Authority. It is not dead, it is not buried, as much as Corrigan wants to say, `It's something from the past; it's nothing to do with me.'Scanlon wanted to settle his case with the NCA to try and pretend he had a win. He paid costs. The big test when it comes to a settlement in a legal action is who pays the costs. Peter Scanlon paid the NCA's costs. He got out and left John Elliott in this case by himself. He can say what he likes afterwards, but he knew that he was going to lose that case because it was an absolute scam. He was trying to pretend the NCA prosecuted him, chased him, defamed him and lowered his standing in the community, causing him to claim $200 million worth of damages.Three of the four original claimants in that case have now bailed out and paid the NCA's costs. There is just big John left, and he will go down, too. He will be up for an awful lot of costs when that is all settled. But that is a matter before the courts and I do not want to canvass it too widely. I simply make the point again that Scanlon pulled the pin, paid the costs of the NCA, and got out.All the time that was happening, what was the government doing? It was having secret meetings with this company—establishing itself, setting itself up to take ordinary workers' superannuation, ordinary workers' leave loading and long service leave—and with this same man. It was setting itself up to move in with the dogs on the chains and the people in balaclavas.How would you feel if you were one of those Townsville wharfies who were acknowledged by the Prime Minister on A Current Affair as meeting world's best practice? There is no dispute. Neither the government, Scanlon nor Corrigan has tried to say that, up in Townsville, the workers were involved in anything other than world's best practice. Yet they had to be sacked as well. The Prime Minister admitted on national television, `Well, there'll be a few casualties along the way on the glorious road to reform.' They were sacked because they were union members; they lost their entitlements because they were union members, and this government was in it up to its neck.I read with interest in this morning's papers that Justice North rejected the government's claims that it would be just too hard now to hold the court case into this and that it should be put off until the end of the year. Justice North said that the court case will go on. So we all look forward to the revelations. We all look forward to seeing a number of senior government ministers in the dock providing the documents that they will not give this Senate. They have now rejected the Democrats' and the opposition's attempts to get hold of the documents that will show how complicit they were.Two weeks ago we even had the revelation in the Financial Review that the government, following a request to do so, provided a document and said, `This is it; this is what you asked for.' Then we find out from the Financial Review that they blanked out the last line and the attachment because the last line said, `Refer to the structure in the attach ment.' What is that if not misleading the Senate? They are prepared to do anything to hide their involvement in this.So it will come as no surprise when they reject our amendments, Senator Murray, because they have been in it up to their necks. They are in a situation where they could go to the state legal officers, the attorneys-general, and say, `We need this to protect battlers.' They could go to Queensland and say, `Here's your chance, Rob Borbidge; here's your chance, Joan Sheldon. You can support the battlers in your state; you can protect Townsville workers'—3M6MURRAYSenator Murray—And small business.3L6Conroy, Sen StephenSenator CONROY—And small business—absolutely, Senator Murray. They could say, `You can be part of protecting all of those. You can use this in your state election. This will be a big winner for you, and it will dovetail in with our strategy about the battlers. But don't mention the GST; talk about the battlers instead.' So the smell test should have been applied to Patrick, it should have been applied to Corrigan, and it should have been applied to Scanlon, because there is no way anybody who is reputable in the financial community would deal with Scanlon and Elliott any more. Those are the facts if you go and talk with the business community around Australia. They know they smell; they know what really went on. But this government decided, for their own grubby ends, that the ends justified the means. They were prepared to look the other way, and—worse—they were prepared to deceive this parliament consistently for 12 months while they set up this corporate scam. Today is the day of reckoning. Today you can accept the amendments that will stop this sort of asset stripping and the taking of workers' legal entitlements away from them.Amendments (by Senator Cook) agreed to.Amendments (by Senator Murray), as amended, agreed to.14:37:003502Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move:(1) Schedule 1, page 7 (after line 27), after item 8, insert: 8A After subsection 9(3)Insert: (3AA) At least one member must be a consumer representative. (3AB) The Minister shall nominate a person as a member under subsection (3AA) only if the Minister is satisfied that the person has, as a substantial part of his or her recent work, been a consumer representative or advocate in the financial services industry or a related industry.(2) Schedule 1, page 8 (after line 1), after item 9, insert:9A Subsection 9(4)Omit "The", substitute "Subject to subsections (3AA) and (3AB), the".(3) Schedule 14, item 48, page 162 (line 19), at the end of paragraph (d), add ", at least one of whom must be a consumer representative".(4) Schedule 14, item 48, page 163 (after line 9), after subsection 25B(3), insert:(3A) The Governor-General must not appoint a person as a consumer representative member unless the Governor-General is satisfied that the person has, as a substantial part of his or her recent work, been a consumer representative or advocate in the financial services industry or a related industry.These amendments refer to the Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 . I have outlined in my speech at the second reading stage the need for strong consumer protection in the financial services industry, a sentiment echoed in other speeches in the second reading debate. Most of our discussion on this will be under the Financial Sector Reform (Consequential Amendments) Bill 1998, which we will be considering after this one.Satisfactory consumer protection will not be achieved simply by legislating for codes of conduct and dispute resolution processes. We also need to ensure that policy settings and the operations of key regulators are also guided by consumer considerations. Amendments 1 and 2 provide that the membership of the Payment System Board includes a member with a consumer representation or advocacy background. The Payment System Board will be replacing some of the functions of the Australian Payment System Council. The board will retain the payment system monitoring and public reporting functions of the APSC. Consumer representatives have contributed greatly to its operation. The need for consumer representation in this area continues, as the advent of new technologies greatly increases the complexity of participation in the payment systems and broadens the issues.Amendments 3 and 4 refer to the need for consumer expertise within the new Australian Securities and Investments Commission. That is paramount now that ASIC is to be solely responsible for financial sector consumer protection. It will be vital that there is the necessary experience and understanding of consumer protection issues at the top executive level as the transition is made from the ASC to the vastly expanded ASIC. Such guidance will help establish the new vision for ASIC: the new structures, the new culture and the new operational approaches.We are therefore moving to ensure that a commissioner is appointed to the ASIC who has consumer protection experience. We are encouraged by the work on measures for the `good advice' policy program. The government may argue that the ASC already has such a person at commissioner level. If that is so, it does not militate against our amendment, because there is no requirement for such a person at this stage. What we are seeking is a requirement for there to be such a person.Our eye was also drawn to the Financial Sector Advisory Council. This council has some very eminent Australian business people drawn from the financial sector. They are doubtless very well placed to discuss the impact of the post- Wallis changes, or what will be post-Wallis after today, on finance sector companies. The council seems less well placed to discuss the impacts of those reforms on customers. Businesses, of course, are always concerned with customers because that is where they make their profit, but they may not view customers in the way that we would expect a customer representative to view customers. This is a poignant concern because of the fact that the council will be responsible for an evaluation of the reforms in five years, so we are looking for a particular perspective. The council is non-statutory, so the Australian Democrats are not seeking legislative measures there but do seek action by the Treasurer and Assistant Treasurer, and indeed by the Parliamentary Secretary, to redress this imbalance.14:42:003504Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—The Democrat amendments propose that at least one member of ASIC and the Payment System Board should be a consumer representative. As senators would know, there are currently three commissioners of the ASC, including the chairman. They operate on a full-time basis and do not act as representatives of any sectional interest. They are appointed on the basis of their standing and their expertise. It is undesirable to appoint representatives of consumers, or any other interests, for that matter, as managers of a regulatory authority with the enforcement responsibilities of the ASIC. This could lead to regulatory capture.At the moment all three ASC commissioners seek to pursue consumer interests and, if you change the dynamics of this by making one of them a representative of consumers, you may risk issues been decided through an effective voting process. It can also lead to calls by each sectional interest for equivalent representation. ASC commissioners currently and deliberately are required to sever all ties with their previous employer to avoid any potential or perceived conflicts of interest. The ASC already has in place extensive consultative mechanisms to ensure input from all relevant interest groups, including consumer representatives. I might say that I know the liaison that occurs between the ASC and consumer groups is extremely active, if not on a daily basis.ASIC will continue to work closely with consumer interests to help it understand fully and to take proper account of consumer needs in policy development and to make it aware at an early stage of problems which consumers are experiencing in the financial services sector. Those comments apply equally to the Payment System Council. I might also say that the government's proposed amendments to the ASC's mission statement make it quite clear that the interests of consumers and the role in the ASC of protecting the interests of consumers are paramount. In particular, if you look at the FSI (Amendments and Transitional Provisions) Bill 1998 it says:In performing its functions and exercising its powers, the ASIC must strive to promote the confident and informed participation of investors and consumers in the financial system.We believe that this is a clear signal—in fact, a legislative responsibility—placed on commissioners to act on behalf of consumers. It means you have actually got three commissioners acting on behalf of consumers and not just one. The government will oppose this amendment.14:45:003504Cook, Sen PeterSenator COOKRF4WAALP00—This amendment, as described, would prescribe that a commissioner must be exclusively a consumer representative. The opposition, of course, is sympathetic to what is being put here. We think this is quite an important point, but we balance against it the fact that, if sectional interests were given prominence in a bill such as this, there could and would be arguments that other sectional interests should be represented among the commissioners too.I think, to some extent, whether the commissioners wanted to or not, it would have the effect of creating an expectation that a consumer commissioner would be responsible for consumer matters while they, while embracing consumer matters, might direct their attention to other things as well. The obligation here is that all commissioners should have regard for the consumer interests that this body will deal with. For those reasons, we will not be supporting the amendment.However, as I said at the beginning, this is quite a serious matter because this is an area in which there have been good examples of why there ought to be a duty of responsibility to their consumers for the financial institutions involved here. There are notorious examples of where consumers have not fared well, to put it mildly, at the hands of banks or other financial institutions.I am interested to hear that the government regards this to be of paramount importance; it is important for us to hear that. We regard it as of paramount importance as well. It is my intention, while not supporting the Democrats' position at this point, to indeed monitor the performance and developments of this part of the bill should it become law. Of course, if it does not operate in the way in which the concept has been explained in the bill, in the explanatory memorandum and in the discussions that we have had with the government, we would then reserve the right to come back, reopen this bill and insert the amendment that has been proposed.With those words—I have to call you Mr Chairman, I do not know why standing orders require me to do that, Madam Chairman; but they do, I am informed—perhaps I can seek an assurance from the parliamentary secretary on this point. The particular point that I seek an assurance on, and invite the parliamentary secretary to provide more comment about, is the selection and background of the commissioners.Senator Murray has raised a question about a consumer representative. We are joining the government in resisting that amendment for the reasons that we jointly share, which I have now articulated and which was referred to earlier. The opposition and the government have both gone on the record now, in Hansard, as saying that we regard consumer protection as paramount.It is our view that, under this legislation, all commissioners should be responsible for consumer matters. The selection of the commissioners is important and their background and grasp of consumer issues is important. If all of them are responsible, but if all of them are drawn from the corporate sector and are articulate in corporate affairs but not as sensitive to consumer affairs, irrespective of the delegation of responsibility for consumer interests, their background and comprehension of those interests may be limited.In the selection of these commissioners, I think it is important that the people who are considered have a genuine understanding of the consumer field, or can bridge both the corporate and the consumer fields. Otherwise, with the best will in the world, people will conscientiously turn their attention to a consideration of consumer issues, but if their background does not equip them to comprehend that fully, you will get an in-built bias in the structure of the commission and, thus, I think, less sensitivity to these concerns than the government, the opposition and the Australian Democrats would require. I wonder, Parliamentary Secretary, whether you wish to comment on that?14:49:003505Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—Under subsection 9(4) of the Australian Securities Commission Act, which will become the ASIC act hopefully at some stage this afternoon or when the Governor-General signs it, the minister nominates a person to be what they call a member of the Australian Securities Commission. Clearly, with the redefinition of the functions which put consumer interests as equal to the interests of investors, he will be required to make appointments keeping in mind those functions and responsibilities. He is required to be satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, a number of fields which are set out: business, the administration of companies, financial markets, law, economics and accounting.I think any people in the consumer movement who have had contact with the existing commissioners—Alan Cameron, who was appointed by the previous government and just reappointed by us; Jillian Segal, the newly appointed commissioner; and Peter Day—would know that they are all highly qualified to carry out their functions in relation to consumer protection. I do not think that would ever be an issue. Clearly, the Treasurer will be required to make appointments based on those functions.14:51:003505Cooney, Sen BarneySenator COONEYSF4VICALP00—I agree with Senator Cook and Senator Campbell that people of top ability should be put on this body. But I think Senator Murray makes a good point, that when governments of both colours look to appointments, they do tend to look at people who practise in corporate law, in constitutional law—in what is called the more `glamorous' part of the law—and at people from other parts of society, whether they come from the corporate world or otherwise, from what is generally called `the big end of town'.There is an inference in that that the people who practise in community law, environmental law or consumer protection law are somehow not as good as those who practise in other areas or as people in senior corporate positions. That has not been said by Senator Campbell, but I take this opportunity nevertheless to make the point that oftentimes people who practise what is generally called poverty law or environmental law are overlooked when it is wrong for them to be overlooked. There are outstanding practitioners in the areas that I have mentioned. It is a pity that they are overlooked.Amendments not agreed to.14:53:003506Cook, Sen PeterSenator COOKRF4WAALP00—by leave—I move:(1) Schedule 19, page 225 (after line 17), after the definition of ASIC , insert: ISC employee means a member of the staff assisting the Insurance and Superannuation Commissioner.(2) Schedule 19, page 225 (line 18), after "subitem 25(1)", insert "or subitem 25(3), as the case requires".(3) Schedule 19, page 226 (lines 7 and 8), omit the note.(4) Schedule 19, page 226 (after line 9), at the end of item 25, add:(3) An ISC employee may, at a particular time (the person's transfer time ), become an APRA employee because of a declaration under section 81C of the Public Service Act 1922 .Note about Schedule 19, item 25: The heading to item 25 (page 225, line 25) is altered by adding at the end "and the ISC ".(5) Schedule 19, page 226 (line 12), omit "because of item 25", substitute "as mentioned in subitem 25(1) or (3)".(6) Schedule 19, page 226 (line 19), after "RBA employee", insert "or an ISC employee".(7) Schedule 19, page 226 (line 24), after "RBA employee", insert "or an ISC employee".(8) Schedule 19, page 226 (line 26), after "RBA employee", insert "or an ISC employee". (9) Schedule 19, page 227 (line 3), omit "under item 25", substitute "as mentioned in subitem 25(1) or (3)".(10) Schedule 19, page 227 (line 4), after "Reserve Bank", insert "or the Insurance and Superannuation Commissioner, as the case requires,".(11) Schedule 19, page 227 (line 9), after "Reserve Bank", insert "or the Insurance and Superannuation Commissioner".Labor's amendments seek to protect Australian Public Service employees transferring to APRA—namely, the 370-odd Insurance Superannuation Commission employees. Schedule 19, items 26 and 27, dealing with terms and conditions of transferred staff and accrued benefits of staff transferring across to the new authority, refer specifically and exclusively to Reserve Bank employees. No reference is made to ISC employees. ISC employees have no legislative grounding to maintain their current terms and conditions of employment or recruit entitlements. Our amendments simply include ISC employees wherever Reserve Bank of Australia employees are mentioned. They ensure that the same guarantees that are given to one set of employees—the RBA employees—are given to all.To return to 170MB of the Workplace Relations Act, the government originally said that these amendments were not necessary as ISC employees are covered by section 170MB of the Workplace Relations Act 1996, whereas Reserve Bank of Australia employees are not, which is why they need mention in the APRA legislation.The first point to make is that 170MB covers only certified agreements; it does not cover accrued entitlements or other conditions that APS employees may currently hold, and our amendments would guarantee that. The second issue is that the government has since acknowledged in writing that, because the ISC certified agreement refers to the Public Service Act, technically section 170MB would not apply. I have a letter here which I intend to seek leave to table. I have not shown this to the parliamentary secretary yet. I am happy to defer the seeking of leave until such time as he has had a look at it.The Treasurer's office first offered to read a statement outlining their commitment to preserve Australian Public Service conditions into Hansard during this debate. While welcome, this was not acceptable to the opposition as sufficient safeguard for the employees. It remains our position that these commitments should be enacted. The government then agreed to go away and come up with suitable amendments—amendments that are now being moved on behalf of the opposition. For whatever reason, they are not prepared to move these amendments themselves.I note that these amendments are a revised version. They reflect the consultations we have had with the government and limit the cover to ISC employees rather than the broad definition of APS employees. This is a result of the government's written assurances that only ISC employees will be affected in the transfer to the new authority. I have another letter which I have not yet shown to the parliamentary secretary. I intend to seek leave to table that letter as well.The APS employees are transferred under section 18(c) of the Public Service Act 1922. It allows the Commonwealth authority to `determine any special terms or conditions of employment that are to apply to the persons.' This gives APRA the power to preserve the conditions of employment previously held by APS employees. It also gives them the power to disregard such conditions. A further point should be made about section 81(c). Section 81(c) only comes into effect upon transfer. Only once transferred can the board grant special terms and conditions to staff. This does not give staff any certainty in the interim period. Because APRA does not currently exist, any agreements on conditions, remuneration and entitlements would be subject to approval by the APRA board when established.Our amendments give guarantees to staff, irrespective of whether or not they have yet been transferred, that the conditions the board determines are no less favourable than those that they would currently hold. I acknowledge that both the Treasurer and the APRA chief executive officer designate, Graeme Thompson, have indicated that most current Public Service conditions will be maintained, although the Treasurer has qualified this by saying that they will be `largely maintained'.At this stage the government has not made any detailed commitments to staff. On that point, I would remind the Senate that the government does have form on reneging on commitments given to Australian Public Service employees transferring to newly established agencies or authorities. Previous commitments made to the Commonwealth Employment Service staff transferring to Employment National were not honoured when this government set about establishing Employment National through the backdoor.Without going into that issue, I think it is clear that our amendments would prevent even the possibility of a similar situation occurring here. If the government really is committed to preserving the conditions currently held by ISC employees, then our amendments only ask it to put its money where its mouth is and enact the informal commitments already given.Finally, I say that the government has also said that our amendments are duplicitous, creating nothing more than pages of extra legislation. We reject this assertion on two fronts. Firstly, we believe that our amendments enshrining in legislation the government's commitments are the best way of ensuring that ISC employees be transferred across to APRA, retaining conditions of employment that are no less favourable than those they currently hold. Secondly, our amendments, far from adding pages of legislation to this omnibus bill, add no more than a few lines.We believe that the legislation should be explicit for all employees, not just Reserve Bank of Australia employees. Our amendments are simple and brief, but they do deliver certainty to ISC employees transferring to the authority.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Crowley)—Senator Cook, you sought leave to table two letters. For the first letter, which is addressed to Mr Tom Wheelwright, leave is granted. For the second letter, of which I do not have a copy, leave is not granted. RF4Cook, Sen PeterSenator COOK—Leave is not granted?H15CAMPBELLSenator Ian Campbell—Leave may be granted, but we just thought it would be a courtesy to ask Mr Thompson first.15:02:003508Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—On this issue I will be brief, because we would love to get this finished by quarter to four today. The government believes that these amendments do not need to be included in the legislation, because section 81C of the Public Service Act 1922 provides the mechanism to move APS staff from the APS to a Commonwealth authority, and it enables the APRA board to determine any special terms and conditions of employment to apply to transferring staff.The legislation was drafted to cover the transfer of RBA staff because they cannot be moved to APRA without specific enabling legislation. The APRA chief executive officer and chairman elect have stated, pending harmonisation of workplace terms and conditions, that they intend to apply the terms and conditions of the ISC certified agreement to ISC transferees with only those amendments as are necessary consequent upon the staff ceasing to be the APS.Madam Chairman, because we can see that the numbers are clearly here for these amendments, we will not be calling a division on this matter. We will, however, be voting no. That, we believe, is in the interests of the expedient handling of the legislation.15:03:003508Murray, Sen AndrewSenator MURRAY3M6WAAD00—The Australian Democrats find the arguments of the Labor Party persuasive.Amendments agreed to.Bill, as amended, agreed to.FINANCIAL SECTOR REFORM (CONSEQUENTIAL AMENDMENTS) BILL 1998The bill.15:04:003508Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—by leave—I move:(1) Clause 2, page 2 (lines 4 to 6), omit subclause 2, substitute: (2) Subject to subsections (3) to (14), Schedules 1, 2 and 3 commence on the commencement of the Australian Prudential Regulation Authority Act 1998 .(2) Clause 2, page 3 (after line 28), at the end of the clause, add:(13) Items 1, 6, 18, 20 and 21 of Schedule 2 commence immediately after the commencement of Schedule 1 to the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 .(14) Items 4, 6, 12, 14, 15, 16 and 28 of Schedule 3 commence immediately after the commencement of the Managed Investments Act 1998 .(3) Page 34 (after line 19), at the end of the Bill, add:Schedule 2—Unconscionable conduct and consumer protection in relation to the supply of financial servicesPart 1—Amendment of the Australian Securities and Investments Commission Act 19891 Subsection 1B(1)After "section 12A", insert "and Division 2 of Part 2".2 Subsection 5(1) (subparagraph (a)(iii) of the definition of national scheme law )Add "(other than section 12A and Division 2 of Part 2)".3 Part 2 (heading)Repeal the heading, substitute:Part 2—The Commission and consumer protection in relation to financial services4 Before section 7Insert:Division 1—Establishing the Commission5 At the end of paragraph 11(1)(c)Add "(other than section 12A and Division 2 of Part 2)".6 Subsection 12A(1)After "on it by or under", insert "Division 2 of Part 2 of this Act and by or under".7 At the end of Part 2Add:Division 2—Unconscionable conduct and consumer protection in relation to financial servicesSubdivision A—Application12AA Constitutional operation of Division(1) Without prejudice to its effect apart from this section, this Division also has effect as provided by this section. (2) This Division has, by force of this subsection, the effect it would have if: (a) references in this Division to trade or commerce were, by express provision, confined to trade or commerce: (i) between Australia and places outside Australia; or (ii) among the States; or (iii) within a Territory, between a State and a Territory or between 2 Territories; or (iv) by way of the supply of services to the Commonwealth or an authority or instrumentality of the Commonwealth; and (b) section 12DJ were, by express provision, confined in its operation to engaging in conduct to the extent to which the conduct takes place in the course of or in relation to: (i) trade or commerce between Australia and places outside Australia; or (ii) trade or commerce among the States; or (iii) trade or commerce within a Territory, between a State and a Territory or between 2 Territories; or (iv) the supply of services to the Commonwealth or an authority or instrumentality of the Commonwealth; and (c) reference in Subdivision E (sections 12EA to 12ED) to a contract for the supply of services or to the supply of services were, by express provision, confined to a contract made, or to the supply of services: (i) in the course of, or in relation to, trade or commerce between Australia and places outside Australia; or (ii) in the course of, or in relation to, trade or commerce among the States; or (iii) in the course of, or in relation to, trade or commerce within a Territory, between a State and a Territory or between 2 Territories; and (d) references in this Division to a corporation, except a reference in section 12BA, included a reference to a person other than a corporation.(3) In addition to the effect that this Division has as provided by subsection (2), the provisions of Subdivision C (sections 12CA to 12CB) and Subdivision D (sections 12DA to 12DN) have, by force of this subsection, the effect they would have if: (a) those provisions were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and (b) references in those provisions to a corporation included a reference to a person other than a corporation.(4) In addition to the effect that this Division has as provided by subsections (2) and (3), the provisions of Subdivision C (sections 12CA to 12CB) and Subdivision D (sections 12DA to 12DN) also have, by force of this subsection, the effect they would have if: (a) those provisions were, by express provision, confined in their operation to engaging in conduct in a Territory; and (b) references in those provisions to a thing done by a corporation in trade or commerce included a reference to a thing done in the course of the promotional activities of a professional person.12AB Subdivision E (sections 12EA to 12ED) does not apply to contracts entered into before 1 October 1974Subdivision E (sections 12EA to 12ED) does not apply to a contract entered into before 1 October 1974.12AC Division extends to some conduct outside Australia(1) This Division extends to the engaging in conduct outside Australia by: (a) bodies corporate incorporated or carrying on business within Australia; or (b) Australian citizens; or (c) persons ordinarily resident within Australia.(2) If a claim under section 12FF is made in a proceeding, a person may rely at a hearing in respect of that proceeding on conduct to which a provision of this Division extends because of subsection (1) of this section only if the Minister consents in writing to the reliance.(3) A person other than the Minister or the Commission may apply to the Court for an order under subsection 12FM(1) or (2) in a proceeding in respect of conduct to which a provision of this Division extends because of subsection (1) of this section only if the Minister consents in writing to the application. (4) The Minister must give a consent under subsection (2) or (3) in respect of a proceeding unless, in the Minister's opinion: (a) the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and (b) it is not in the national interest to give the consent.12AD Application of Division to Commonwealth and Commonwealth authorities(1) Subject to this section, this Division binds the Crown in right of the Commonwealth in so far as the Crown in right of the Commonwealth carries on a business, either directly or by an authority of the Commonwealth.(2) Subject to subsections (3), (4), (5) and (6), this Division applies as if: (a) the Commonwealth, in so far as it carries on a business otherwise than by an authority of the Commonwealth; and (b) each authority of the Commonwealth (whether or not acting as an agent of the Crown in right of the Commonwealth) in so far as it carries on a business; were a corporation.(3) Nothing in this Division makes the Crown in right of the Commonwealth liable to a pecuniary penalty or to be prosecuted for an offence.(4) The protection in subsection (3) does not apply to an authority of the Commonwealth.(5) For the purposes of this section, the following transactions do not amount to carrying on a business: (a) a transaction involving only persons who are all acting for the Crown in right of the Commonwealth (and none of whom is an authority of the Commonwealth); (b) a transaction involving only persons who are all acting for the same authority of the Commonwealth; (c) a transaction involving only the Crown in right of the Commonwealth and one or more non-commercial authorities of the Commonwealth; (d) a transaction involving only non-commercial authorities of the Commonwealth.(6) Subsection (5) does not limit the things that do not amount to carrying on a business for the purposes of this section.(7) For the purposes of this section, an authority of the Commonwealth is non-commercial if: (a) it is constituted by only one person; and (b) it is neither a trading corporation nor a financial corporation.12AE Saving of other laws and remedies(1) Except as provided by subsection (2), Subdivision D (sections 12DA to 12DN) and Subdivision E (sections 12EA to 12ED) are not intended to exclude or limit the concurrent operation of any law of a State or Territory.(2) If: (a) an act or omission of a person is both an offence against section 12FB and an offence under the law of a State or Territory; and (b) the person is convicted of either of those offences; the person is not liable to be convicted of the other of those offences.(3) Except as expressly provided by Subdivision D (sections 12DA to 12DN) or Subdivision E (sections 12EA to 12ED), nothing in those Subdivisions is taken to limit, restrict or otherwise affect any right or remedy a person would have had if that Subdivision had not been enacted.(4) This Division does not affect the operation of: (a) the law relating to restraint of trade in so far as that law is capable of operating concurrently with this Division; or (b) the law relating to breaches of confidence; but nothing in the law referred to in paragraph (a) or (b) affects the interpretation of this Division.Subdivision B—Interpretation12BA Interpretation(1) In this Division, unless the contrary intention appears: acquire , in relation to services, includes accept. acquisition of services has the meaning given by section 12BD. authority , in relation to a State or Territory (including an external Territory), means: (a) a body corporate established for a purpose of the State or the Territory by or under a law of the State or Territory; or (b) an incorporated company in which the State or the Territory, or a body corporate referred to in paragraph (a), has a controlling interest. authority of the Commonwealth means: (a) a body corporate established for a purpose of the Commonwealth by or under a law of the Commonwealth or a law of a Territory; or (b) an incorporated company in which the Commonwealth, or a body corporate referred to in paragraph (a), has a controlling interest. business includes a business not carried on for profit. consumer has the meaning given by section 12BC. conduct has the meaning given by subsection (2). contract has the meaning given by section 12BE. corporation means a body corporate that: (a) is a foreign corporation; or (b) is a trading corporation formed within the limits of Australia or is a financial corporation so formed; or (c) is incorporated in a Territory; or (d) is the holding company of a body corporate of a kind referred to in paragraph (a), (b) or (c). covenant means a covenant (including a promise not under seal) annexed to or running with an estate or interest in land (whether at law or in equity and whether or not for the benefit of other land) and proposed covenant has a corresponding meaning. engage in conduct has the meaning given by subsection (2). Family Court Judge means a Judge of the Family Court (including the Chief Judge, the Deputy Chief Judge, a Judge Administrator or a Senior Judge). financial corporation : (a) means a financial corporation within the meaning of paragraph 51(xx) of the Constitution; and (b) includes a body corporate that carries on as its sole or principal business the business of: (i) banking (other than State banking not extending beyond the limits of the State concerned); or (ii) insurance (other than State insurance not extending beyond the limits of the State concerned). financial product means: (a) a facility for taking money on deposit (otherwise than as part-payment for identified services) made available in the course of conducting a banking business within the meaning of the Banking Act 1959 ; or (b) a security; or (c) a futures contract; or (d) a contract of insurance (including a life policy or a sinking fund policy within the meaning of the Life Insurance Act 1995 ); or (e) a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997 ; or (f) a superannuation interest within the meaning of the Superannuation Industry (Supervision) Act 1993 ; but does not include a foreign exchange contract. financial service means a service that: (a) consists of providing a financial product; or (b) is otherwise supplied in relation to a financial product. foreign corporation means a foreign corporation within the meaning of paragraph 51(xx) of the Constitution and includes a body corporate that is incorporated in an external Territory. misleading has the meaning given by section 12BB. price includes a charge of any description. provision , in relation to an understanding, means any matter forming part of the understanding. re-supply of services has the meaning given by section 12BD. send includes deliver, and sent and sender have corresponding meanings. services includes any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce but does not include: (a) the supply of goods within the meaning of the Trade Practices Act 1974 ; or (b) the performance of work under a contract of service. supply : (a) includes provide, grant or confer when used as a verb in relation to services; and (b) has a corresponding meaning when used as a noun; and supplied and supplier have corresponding meanings. supply of services has the meaning given by section 12BD. Territory means: (a) an internal Territory; or (b) the Territory of Christmas Island; or (c) the Territory of Cocos (Keeling) Islands. the Court or the Federal Court means the Federal Court of Australia. trade or commerce means trade or commerce within Australia or between Australia and places outside Australia. trading corporation means a trading corporation within the meaning of paragraph 51(xx) of the Constitution. unsolicited financial services means financial services supplied to a person without any request made by the person or on the person's behalf.(2) In this Division: (a) a reference to engaging in conduct is a reference to doing or refusing to do any act, including: (i) making, or giving effect to a provision of, a contract or arrangement; or (ii) arriving at, or giving effect to a provision of, an understanding; or (iii) requiring the giving of, or giving, a covenant; and (b) a reference to conduct, when that expression is used as a noun otherwise than as mentioned in paragraph (a), is a reference to doing or refusing to do any act, including: (i) making, or giving effect to a provision of, a contract or arrangement; or (ii) arriving at, or giving effect to a provision of, an understanding; or (iii) requiring the giving of, or giving, a covenant; and (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done; and (d) a reference to a person offering to do an act, or to do an act on a particular condition, includes a reference to the person making it known that the person will accept applications, offers or proposals for the person to do that act or to do that act on that condition, as the case may be.12BB Misleading representations(1) For the purposes of section 12CB and Subdivision D (sections 12DA to 12DN), if a corporation makes a representation about a future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation is taken to be misleading.(2) For the purpose of applying subsection (1) to a proceeding concerning a representation made by a corporation about a future matter, the corporation is taken not to have had reasonable grounds for making the representation unless it adduces evidence to the contrary.(3) Subsection (1) does not limit by implication the meaning of a reference in this Division to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead.12BC Consumers(1) For the purposes of this Division, unless the contrary intention appears, a person is taken to have acquired particular financial services as a consumer if, and only if: (a) the price of the services did not exceed the prescribed amount; or (b) if the price of the services exceeded the prescribed amount—the services were of a kind ordinarily acquired for personal, domestic or household use.(2) For the purposes of subsection (1): (a) the prescribed amount is: (i) $40,000; or (ii) if a greater amount is prescribed for the purposes of this paragraph—that greater amount; and (b) subject to paragraph (c), the price of services purchased by a person is taken to have been the amount paid or payable by the person for the services; and (c) if a person purchased services together with other property or services, or with both other property and services, and a specified price was not allocated to the services in the contract under which they were purchased, the price of the services is taken to have been: (i) the price at which, at the time of the acquisition, the person could have purchased the services from the supplier without the other property or services; or (ii) if, at the time of the acquisition, the services were only available for purchase from the supplier together with the other property or services but, at that time, services of the kind acquired were available for purchase from another supplier without other property or services—the lowest price at which the person could, at that time, reasonably have purchased services of that kind from another supplier; or (iii) if, at the time of the acquisition, services of the kind acquired were not available for purchase from any supplier except together with other property or services—the value of the services at that time; and (d) if a person acquired services otherwise than by way of purchase, the price of the services is taken to have been: (i) the price at which, at the time of the acquisition, the person could have purchased the services from the supplier; or (ii) if, at the time of the acquisition, the services were not available for purchase from the supplier, or were available only together with other property or services, but, at that time, services of the kind acquired were available for purchase from another supplier—the lowest price at which the person could, at that time, reasonably have purchased services of that kind from another supplier; or (iii) if services of the kind acquired were not available, at the time of the acquisition, for purchase from any supplier, or were not available except together with other property or services—the value of the services at that time; and (e) without limiting by implication the meaning of the expression services in subsection 12BA(1), the obtaining of credit by a person in connection with the person's acquisition of services is taken to be the acquisition by the person of a service and any amount by which the amount paid or payable by the person for the services is increased by reason of the person's so obtaining credit is taken to be paid or payable by the person for that service. (3) If it is alleged in a proceeding under this Division, or in any other proceeding in respect of a matter arising under this Division, that a person was a consumer in relation to particular services, it is presumed that the person was a consumer in relation to those services unless the contrary is established.12BD Acquisition, supply and re-supplyIn this Division, unless the contrary intention appears: (a) a reference to the supply or acquisition of services includes a reference to agreeing to supply or acquire services; and (b) a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both; and (c) a reference to the re-supply of services (the original services ) acquired from a person (the original supplier ) includes a reference to: (i) a supply of the original services to another person in an altered form or condition; and (ii) a supply to another person of other services that are substantially similar to the original services and could not have been supplied if the original services had not been acquired by the person who acquired them from the original supplier.12BE Application of Division in relation to leases and licences of land and buildingsIn this Division: (a) a reference to a contract includes a reference to a lease of, or a licence in respect of, land or a building or part of a building (despite the express references in this Division to such leases or licences); and (b) a reference to making or entering into a contract, in relation to such a lease or licence, is a reference to granting or taking the lease or licence.Subdivision C—Unconscionable conduct12CA Unconscionable conduct within the meaning of the unwritten law of the States and Territories(1) A corporation must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. (2) This section does not apply to conduct that is prohibited by section 12CB.12CB Unconscionable conduct(1) A corporation must not, in trade or commerce, in connection with the supply or possible supply of financial services to a person, engage in conduct that is, in all the circumstances, unconscionable.(2) Without limiting the matters to which the Court may have regard for the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of services to a person (the consumer ), the Court may have regard to: (a) the relative strengths of the bargaining positions of the corporation and the consumer; and (b) whether, as a result of conduct engaged in by the corporation, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the corporation; and (c) whether the consumer was able to understand any documents relating to the supply or possible supply of the services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the corporation or a person acting on behalf of the corporation in relation to the supply or possible supply of the services; and (e) the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent services from a person other than the corporation.(3) A corporation is not taken for the purposes of this section to engage in unconscionable conduct in connection with the supply or possible supply of financial services to a person merely because the corporation: (a) institutes legal proceedings in relation to that supply or possible supply; or (b) refers a dispute or claim in relation to that supply or possible supply to arbitration.(4) For the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of financial services to a person: (a) the Court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the Court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.(5) A reference in this section to financial services is a reference to financial services of a kind ordinarily acquired for personal, domestic or household use.Subdivision D—Consumer protection12DA Misleading or deceptive conduct(1) A corporation must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.(2) Nothing in sections 12DB to 12DN limits by implication the generality of subsection (1).12DB False or misleading representationsA corporation must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services: (a) falsely represent that services are of a particular standard, quality, value or grade; or (b) falsely represent that a particular person has agreed to acquire services; or (c) represent that services have sponsorship, approval, performance characteristics, uses or benefits they do not have; or (d) represent that the corporation has a sponsorship, approval or affiliation it does not have; or (e) make a false or misleading representation with respect to the price of services; or (f) make a false or misleading representation concerning the need for any services; or (g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.12DC False representations and other misleading or offensive conduct in relation to securities that involve interests in land(1) A corporation must not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of a security that consists of or includes an interest in land, or in connection with the promotion by any means of the sale or grant of an interest in land: (a) represent that the corporation has a sponsorship, approval or affiliation it does not have; or (b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the security, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; or (c) offer gifts, prizes or other free items with the intention of not providing them or of not providing them as offered.(2) A corporation must not use physical force or undue harassment or coercion in connection with the sale or grant, or the possible sale or grant, of a security that consists of or includes an interest in land or the payment for an interest in land.(3) In this section: interest , in relation to land, means: (a) a legal or equitable estate or interest in the land; or (b) a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in an incorporated company that owns the land or building; or (c) a right, power or privilege over, or in connection with, the land.12DD Cash price to be stated in certain circumstancesA corporation must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services; or (b) the promotion by any means of the supply or use of financial services;make a representation about an amount that, if paid, would constitute a part of the consideration for the supply of the services unless the corporation also specifies the cash price for the services.12DE Offering gifts and prizesA corporation must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services; or (b) the promotion by any means of the supply or use of financial services;offer gifts, prizes or other free items with the intention of not providing them, or of not providing them as offered. 12DF Certain misleading conduct in relation to financial servicesA corporation must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any financial services.12DG Bait advertising(1) A corporation must not, in trade or commerce, advertise financial services for supply at a specified price, if there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to offer for supply those services at that price: (a) for a period that is; and (b) in quantities that are;reasonable having regard to the nature of the market in which the corporation carries on business and the nature of the advertisement.(2) A corporation that has, in trade or commerce, advertised financial services for supply at a specified price must offer such services for supply at that price: (a) for a period that is; and (b) in quantities that are;reasonable having regard to the nature of the market in which the corporation carries on business and the nature of the advertisement.(3) In a prosecution of a corporation under Subdivision F (sections 12FA to 12FO) in relation to a failure to offer financial services to a person (the customer ) in accordance with subsection (2), it is a defence if the corporation establishes that: (a) it offered to supply, or to procure another person to supply, services of the kind advertised to the customer within a reasonable time, in a reasonable quantity and at the advertised price; or (b) it offered to supply immediately, or to procure another person to supply within a reasonable time, equivalent services to the customer in a reasonable quantity and at the price at which the first-mentioned services were advertised;and, in either case, if the offer was accepted by the customer, the corporation has so supplied, or procured another person to supply, services.12DH Referral sellingA corporation must not, in trade or commerce, induce a consumer to acquire financial services by representing that the consumer will, after the contract to acquire the services is made, receive a rebate, commission or other benefit in return for: (a) giving the corporation the names of prospective customers; or (b) otherwise assisting the corporation to supply financial services to other consumers;if receipt of the rebate, commission or other benefit is contingent on an event occurring after that contract is made.12DI Accepting payment without intending or being able to supply as orderedA corporation must not, in trade or commerce, accept payment or other consideration for financial services if, at the time of the acceptance: (a) the corporation intends: (i) not to supply the services; or (ii) to supply services materially different from the services in respect of which the payment or other consideration is accepted; or (b) there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to supply the services within the period specified by the corporation or, if no period is specified, within a reasonable time.12DJ Harassment and coercionA corporation must not use physical force, or undue harassment or coercion, in connection with: (a) the supply or possible supply of financial services to a consumer; or (b) the payment for financial services by a consumer.12DK Pyramid selling of securities(1) A corporation contravenes this section if: (a) the corporation is the promoter of, or (if there are more than one) one of the promoters of, or is a participant in, a trading scheme to which this section applies; and (b) a person who is a participant in that trading scheme, or has applied or been invited to become a participant in that trading scheme, makes any payment to or for the benefit of the corporation; and (c) the person is induced to make the payment because the prospect is held out to him or her of receiving payments or other benefits in respect of the introduction (whether by himself or herself or by another person) of other persons who become participants in that trading scheme.(2) A corporation also contravenes this section if: (a) the corporation is the promoter of, or (if there are more than one) one of the promoters of, is a participant in, or is otherwise acting in accordance with, a trading scheme to which this section applies; and (b) the corporation, by holding out to any person the prospect of receiving payments or other benefits in respect of the introduction (whether by himself or herself or by another person) of other persons who become participants in that trading scheme, attempts to induce that person: (i) if he or she is already a participant in that trading scheme, to make any payment to or for the benefit of the promoter or any of the promoters or to or for the benefit of a participant in that trading scheme; or (ii) if he or she is not already a participant in that trading scheme, to become such a participant and to make a payment of a kind mentioned in subparagraph (i).(3) A corporation also contravenes this section if the corporation promotes, or takes part in the promotion of, a scheme under which: (a) a payment is to be made by a person who participates, or who has applied or been invited to participate, in the scheme to or for the benefit of the corporation or another person who takes part in the promotion of the scheme or to or for the benefit of another person who participates in the scheme; and (b) the inducement for making the payment is the holding out to the person who makes or is to make the payment the prospect of receiving payments from other persons who may participate in the scheme.(4) For the purposes of subsection (1), (2) or (3): (a) a prospect of a kind mentioned in that subsection is taken to be held out to a person whether it is held out so as to confer on him or her a legally enforceable right or not; and (b) in determining whether an inducement or attempt to induce is made by holding out a prospect of a kind mentioned in that subsection, it is sufficient if a prospect of that kind constitutes or would constitute a substantial part of the inducement; and (c) any reference to the making of a payment to or for the benefit of a person includes a reference to the making of a payment partly to or for the benefit of that person and partly to or for the benefit of one or more other persons.(5) For the purposes of this section, a scheme is a trading scheme to which this section applies if the scheme includes the following elements: (a) securities are to be provided by the person promoting the scheme (the promoter ) or, in the case of a scheme promoted by 2 or more persons acting in concert (the promoters ), are to be provided by one or more of those persons; and (b) the securities so provided are to be supplied to or for other persons under transactions arranged or effected by persons who participate in the scheme (each of whom is in this section referred to as a participant ), being persons not all of whom are promoters.(6) For the purposes of subsection (5): (a) a scheme shall be taken to include the element referred to in paragraph (5)(b) whether a participant who is not a promoter acts in relation to a transaction referred to in that paragraph in the capacity of a servant or agent of the promoter or of one of the promoters or in any other capacity; and (b) a scheme includes any arrangements made in connection with the carrying on of a business, whether those arrangements are made or recorded wholly or partly in writing or not; and (c) a reference to the provision of a security by a person includes a reference to the provision of a security under arrangements to which that person is a party.12DL Unsolicited credit and debit cards(1) A corporation must not send a person: (a) a debit card that allows access to an account that is a financial product; or (b) an article that may be used as a debit card of that kind;except in accordance with subsection (2).(2) A corporation may send the person the card: (a) in pursuance of a request in writing by the person who will be under a liability to the person who issued the card in respect of the use of the card; or (b) in renewal or replacement of, or in substitution for: (i) a card of the same kind previously sent to the first-mentioned person in pursuance of a request in writing by the person who was under a liability to the person who issued the card previously so sent in respect of the use of that card; or (ii) a card of the same kind previously sent to the first-mentioned person and used for a purpose for which it was intended to be used.(3) Subsection (1) applies only in relation to the sending of a card by or on behalf of the person who issued the card.(4) A corporation must not take any action that enables a person who has a credit card to use the card as a debit card except in accordance with a request in writing by the person.(5) In this section: article includes a token, card or document. credit card means: (a) any article of a kind commonly known as a credit card; or (b) any similar article intended for use in obtaining cash, goods or services on credit;and includes any article of a kind that persons carrying on business commonly issue to their customers or prospective customers for use in obtaining goods or services from those persons on credit. debit card means an article intended for use by a person in obtaining access to an account that is: (a) held by the person for the purpose of withdrawing or depositing cash or obtaining goods or services; and (b) a financial product.12DM Assertion of right to payment for unsolicited financial services(1) A corporation must not, in trade or commerce, assert a right to payment from a person for unsolicited financial services unless the corporation has reasonable cause to believe that there is a right to payment.(2) For the purposes of this section, a corporation is taken to assert a right to a payment from a person for unsolicited financial services if the corporation: (a) makes a demand for the payment or asserts a present or prospective right to the payment; or (b) threatens to bring any legal proceedings with a view to obtaining the payment; or (c) places, or causes to be placed, the name of the person on a list of defaulters or debtors, or threatens to do so, with a view to obtaining the payment; or (d) invokes, or causes to be invoked, any other collection procedure, or threatens to do so, with a view to obtaining the payment; or (e) sends any invoice or other document stating the amount of the payment or setting out the price of the services and not stating as prominently (or more prominently) that no claim is made to the payment or to payment of the price.(3) For the purposes of this section, an invoice or other document purporting to have been sent by or on behalf of a corporation is taken to have been sent by that corporation unless the contrary is established.(4) In a proceeding against a corporation in respect of a contravention of this section, the burden lies on the corporation of proving that the corporation had reasonable cause to believe that there was a right to payment.12DN Application of provisions of Division to prescribed information providers(1) Nothing in section 12DA, 12DB, 12DC or 12DF applies to a prescribed publication of matter by a prescribed information provider, other than: (a) a publication of matter in connection with: (i) the supply or possible supply of financial services; or (ii) the sale or grant, or possible sale or grant, of securities that consist of, or include, interests in land; or (iii) the promotion by any means of the supply or use of financial services; or (iv) the promotion by any means of the sale or grant of securities that consist of, or include, interests in land; if: (v) the services were relevant services, or the interests in land were relevant interests in land, as the case may be, in relation to the prescribed information provider; or (vi) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with: (A) a person who supplies financial services of that kind, or who sells or grants securities of that kind; or (B) a body corporate that is related to a body corporate that supplies financial services of that kind, or that sells or grants securities of that kind; or (b) a publication of an advertisement.(2) For the purposes of this section, a publication by a prescribed information provider is a prescribed publication if: (a) in any case—the publication was made by the prescribed information provider in the course of carrying on a business of providing information; or (b) in the case of a person who is a prescribed information provider by virtue of paragraph (a), (b) or (c) of the definition of prescribed information provider in subsection (3) (whether or not the person is also a prescribed information provider by virtue of another operation of that definition)—the publication was by way of a radio or television broadcast by the prescribed information provider.(3) In this section: prescribed information provider means a person who carries on a business of providing information and, without limiting the generality of the foregoing, includes: (a) the holder of a licence granted under the Broadcasting Services Act 1992 ; and (b) a person who is the provider of a broadcasting service under a class licence under that Act; and (c) the holder of a licence continued in force by subsection 5(1) of the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992 ; and (d) the Australian Broadcasting Corporation; and (e) the Special Broadcasting Service Corporation. relevant financial services , in relation to a prescribed information provider, means financial services of a kind supplied by the prescribed information provider or, if the prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider. relevant interests in land , in relation to a prescribed information provider, means interests in land, being interests of a kind sold or granted by the prescribed information provider or, if the prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider. Subdivision E—Conditions and warranties in consumer transactions12EA Conflict of lawsIf: (a) the proper law of a contract for the supply by a corporation of financial services to a consumer would, but for a term that it should be the law of some other country or a term to the like effect, be the law of any part of Australia; or (b) a contract for the supply by a corporation of financial services to a consumer contains a term that purports to substitute, or has the effect of substituting, provisions of the law of some other country, or of a State or Territory, for all or any of the provisions of this Subdivision (sections 12EA to 12ED);this Subdivision applies to the contract notwithstanding that term.12EB Application of provisions not to be excluded or modified(1) A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void if it purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Subdivision (sections 12EA to 12ED); or (b) the exercise of a right conferred by such a provision; or (c) any liability of the corporation for breach of a condition or warranty implied by such a provision.(2) A term of a contract is not taken to exclude, restrict or modify the application of a provision of this Subdivision unless the term does so expressly or is inconsistent with that provision.12EC Limitation of liability for breach of certain conditions or warranties(1) Subject to this section, a term of a contract for the supply by a corporation of financial services other than services of a kind ordinarily acquired for personal, domestic or household use is not void under section 12EB merely because the term limits the liability of the corporation for a breach of a condition or warranty to: (a) the supplying of the services again; or (b) the payment of the cost of having the services supplied again. (2) Subsection (1) does not apply in relation to a term of a contract if the person to whom the services were supplied establishes that it is not fair or reasonable for the corporation to rely on that term of the contract.(3) In determining for the purposes of subsection (2) whether or not reliance on a term of a contract is fair or reasonable, a court must have regard to all the circumstances of the case and, in particular, to the following matters: (a) the strength of the bargaining positions of the corporation and the person to whom the services were supplied (the buyer ) relative to each other, taking into account, among other things, the availability of equivalent services and suitable alternative sources of supply; (b) whether the buyer received an inducement to agree to the term or, in agreeing to the term, had an opportunity to acquire the services or equivalent services from any source of supply under a contract that did not include that term; (c) whether the buyer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties).12ED Warranties in relation to the supply of financial services(1) In every contract for the supply of financial services by a corporation to a consumer in the course of a business, there is an implied warranty that: (a) the services will be rendered with due care and skill; and (b) any materials supplied in connection with those services will be reasonably fit for the purpose for which they are supplied.(2) If: (a) a corporation supplies financial services to a consumer in the course of a business; and (b) the consumer, expressly or by implication, makes known to the corporation: (i) any particular purpose for which the services are required; or (ii) the result that he or she desires the services to achieve;there is an implied warranty that: (c) the services supplied under the contract for the supply of the services; and (d) any materials supplied in connection with those services;will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result, except if the circumstances show that the consumer does not rely, or that it is unreasonable for him or her to rely, on the corporation's skill or judgment.(3) A reference in this section to financial services does not include a reference to services that are, or are to be, provided, granted or conferred under a contract of insurance.Subdivision F—Enforcement and remedies12FA InterpretationIn this Subdivision, unless the contrary intention appears: (a) a reference to the Court in relation to a matter is a reference to any court having jurisdiction in the matter; and (b) a reference to the Federal Court is a reference to the Federal Court of Australia; and (c) a reference to a judgment is a reference to a judgment, decree or order, whether final or interlocutory.12FB Offences against Subdivision D or E(1) A person who: (a) contravenes; or (b) aids, abets, counsels or procures a person to contravene; or (c) induces, or attempts to induce, a person whether by threats or promises or otherwise, to contravene; or (d) is in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of; or (e) conspires with others to contravene;a provision of Subdivision D or E (sections 12DA to 12ED) other than section 12DA, is guilty of an offence punishable on conviction: (f) in the case of a person who is not a body corporate—by a fine not exceeding 400 penalty units; or (g) in the case of a person who is a body corporate—by a fine not exceeding 2,000 penalty units.(2) If: (a) a person is convicted of 2 or more offences constituted by, or relating to, contraventions of the same provision of Subdivision D or E (sections 12DA to 12ED); and (b) the contraventions appear to the Court to have been of the same nature or a substantially similar nature and to have occurred at or about the same time;the Court must not, in respect of the offences, impose on the person fines that, in the aggregate, exceed the maximum fine that would be applicable in respect of one offence by that person against that provision. This applies whether or not the person is also convicted of an offence or offences constituted by, or relating to, another contravention or other contraventions of that provision that were of a different nature or occurred at a different time.(3) If: (a) a person is convicted of an offence constituted by, or relating to, a contravention of a provision of Subdivision D or E (sections 12DA to 12ED); and (b) a fine has, or fines have, previously been imposed on the person by the Court for an offence or offences constituted by, or relating to, another contravention or other contraventions of the same provision, being a contravention that, or contraventions each of which, appears to the Court to have been of the same nature as, or of a substantially similar nature to, and to have occurred at or about the same time as, the contravention referred to in paragraph (a);the Court must not, in respect of the offence referred to in paragraph (a), impose on the person a fine that exceeds the amount (if any) by which the maximum fine applicable (under subsection (1)) in respect of the offence referred to in paragraph (a) is greater than the amount of the fine, or the sum of the amounts of the fines, referred to in paragraph (b). This applies whether or not a fine has, or fines have, also previously been imposed on the person for an offence or offences constituted by, or relating to, a contravention or contraventions of that provision that were of a different nature or occurred at a different time.(4) In proceedings under this section against a person for contravening a provision of Subdivision D or E (sections 12DA to 12ED), the Court may: (a) grant an injunction under section 12FD against the person in relation to: (i) the conduct that constitutes, or is alleged to constitute, the contravention; or (ii) other conduct of that kind; or (b) make an order under section 12FE in relation to the contravention. (5) Sections 5, 7 and 7A of the Crimes Act 1914 do not apply in relation to an offence against subsection (1).(6) A prosecution for an offence against subsection (1) may be commenced within 3 years after the commission of the offence.12FC Enforcement and recovery of certain fines(1) If a person on whom a fine has been imposed for an offence against section 12FB or subsection 12FN(5) defaults in payment of the fine, a Court may: (a) exercise any power that the Court has apart from this section with respect to the enforcement and recovery of fines imposed by the Court; or (b) make an order, on the application of the Minister or the Commission, declaring that the fine is to have effect, and may be enforced, as if it were a judgment debt under a judgment of the Court.(2) If a person in relation to whom an order is made under subsection (1) in respect of a fine gives security for the payment of the fine, the Court must cancel the order in respect of the fine.(3) If the Court makes an order in relation to a person in respect of a fine, the Court may, at any time before the order is executed in respect of the fine, allow the person a specified time in which to pay the fine or allow the person to pay the fine by specified instalments, and, in that case: (a) the order must not be executed unless the person fails to pay the fine within that time or fails to pay an instalment at or before the time when it becomes payable, as the case may be; and (b) if the person pays the fine within that time or pays all the instalments, as the case may be, the order is taken to have been discharged in respect of the fine.(4) Subject to subsection (7), an order under subsection (1) in respect of a fine ceases to have effect: (a) on payment of the fine; or (b) if the fine is not paid—on full compliance with the order.(5) The term of a sentence of imprisonment imposed by an order under a law of a State or Territory applied by section 15A of the Crimes Act 1914 in respect of a fine must be calculated at the rate of one day's imprisonment for each $25 of the amount of the fine that is from time to time unpaid. (6) Subject to subsection (7), if a person is required to serve periods of imprisonment under an order or orders under subsection (1) in respect of 2 or more fines, those periods of imprisonment must be served consecutively.(7) Subject to subsection (8), if: (a) a person would, but for this subsection, be required under an order or orders under subsection (1) in respect of 3 or more fines to serve periods of imprisonment in respect of those fines exceeding in the aggregate 3 years; and (b) those fines were imposed (whether or not in the same proceedings) for offences constituted by contraventions that occurred within a period of 2 years, being contraventions that appear to the Court to have been of the same nature or a substantially similar nature;the Court must, by order, declare that the order or orders are to cease to have effect in respect of those fines after the person has served an aggregate of 3 years' imprisonment in respect of those fines.(8) If subsection (7) would, but for this subsection, apply to a person with respect to offences committed by the person within 2 or more overlapping periods of 2 years, the Court must make an order under that subsection with respect to one only of those periods, being whichever period would give the person the maximum benefit from the application of that subsection.(9) For the purposes of subsection (8), the Court may vary or revoke an order made under subsection (7).(10) Paragraphs 15A(1)(b), (c) and (d) of the Crimes Act 1914 do not apply with respect to fines referred to in subsection (1).12FD Injunctions(1) If, on the application of the Minister, the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute: (a) a contravention of a provision of this Division; or (b) attempting to contravene such a provision; or (c) aiding, abetting, counselling or procuring a person to contravene such a provision; or (d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (f) conspiring with others to contravene such a provision;the Court may grant an injunction in such terms as the Court determines to be appropriate.(2) If an application for an injunction under subsection (1) has been made, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in subsection (1).(3) If in the opinion of the Court it is desirable to do so, the Court may grant an interim injunction pending determination of an application under subsection (1).(4) The Court may rescind or vary an injunction granted under subsection (1) or (3).(5) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and (b) whether or not the person has previously engaged in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.(6) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised: (a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and (b) whether or not the person has previously refused or failed to do that act or thing; and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.(7) If the Minister or the Commission makes an application to the Court for the grant of an injunction under this section, the Court must not require the applicant or any other person, as a condition of granting an interim injunction, to give any undertakings as to damages.(8) If, in a case to which subsection (7) does not apply: (a) the Court would, but for this subsection, require a person to give an undertaking as to damages or costs; and (b) the Minister gives the undertaking;the Court must accept the undertaking by the Minister and must not require a further undertaking from any other person.12FE Order to disclose information or publish advertisementWithout limiting the generality of section 12FD, if, on the application of the Minister or the Commission, the Court is satisfied that a person has engaged in conduct constituting a contravention of a provision of Subdivision D or E (sections 12DA to 12ED), the Court may make either or both of the following orders: (a) an order requiring that person or a person involved in the contravention to disclose to the public, to a particular person or to persons included in a particular class of persons, in such manner as is specified in the order, such information, or information of such a kind, as is so specified, being information that is in the possession of the person to whom the order is directed or to which that person has access; (b) an order requiring that person or a person involved in the contravention to publish, at his or her own expense, in a manner and at times specified in the order, advertisements the terms of which are specified in, or are to be determined in accordance with, the order.12FF Actions for damages(1) A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision D or E (sections 12DA to 12ED) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.(2) An action under subsection (1) may be commenced within 3 years after the date on which the cause of action accrued.12FG Finding in proceedings to be evidenceIn a proceeding against a person under section 12FF or in an application under subsection 12FM(2) for an order against a person, a finding of any fact by a court made in proceedings under section 12FD or 12FE, or for an offence against section 12FB, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of this Division is prima facie evidence of that fact. The finding may be proved by production of a document under the seal of the court from which the finding appears.12FH Conduct by directors, servants or agents(1) If, in a proceeding under this Subdivision in respect of conduct engaged in by a body corporate, being conduct in relation to which the Division applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind.(2) Any conduct engaged in on behalf of a body corporate: (a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;is taken, for the purposes of this Division, to have been engaged in also by the body corporate.(3) If, in a proceeding under this Subdivision in respect of conduct engaged in by a person other than a body corporate, being conduct in relation to which a provision of this Division applies, it is necessary to establish the state of mind of the person, it is sufficient to show that a servant or agent of the person, being a servant or agent by whom the conduct was engaged in within the scope of the servant's or agent's actual or apparent authority, had that state of mind.(4) Conduct engaged in on behalf of a person (the principal ) other than a body corporate: (a) by a servant or agent of the person within the scope of the actual or apparent authority of the servant or agent; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a servant or agent of the principal, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the servant or agent;is taken, for the purposes of this Division, to have been engaged in also by the principal.(5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for the person's intention, opinion, belief or purpose.12FI Defences(1) Subject to subsection (3), in a prosecution under this Subdivision in relation to a contravention of a provision of Subdivision D or E (sections 12DA to 12ED), it is a defence if the defendant establishes: (a) that the contravention in respect of which the proceeding was instituted was due to reasonable mistake; or (b) that the contravention in respect of which the proceeding was instituted was due to reasonable reliance on information supplied by another person; or (c) that: (i) the contravention in respect of which the proceeding was instituted was due to the act or default of another person, to an accident or to some other cause beyond the defendant's control; and (ii) the defendant took reasonable precautions and exercised due diligence to avoid the contravention.(2) In paragraphs (1)(b) and (c), another person does not include a person who was: (a) a servant or agent of the defendant; or (b) in the case of a defendant being a body corporate, a director, servant or agent of the defendant;at the time when the contravention occurred.(3) If a defence provided by subsection (1) involves an allegation that a contravention was due to reliance on information supplied by another person or to the act or default of another person, the defendant is not, without leave of the Court, entitled to rely on that defence unless he or she has, not later than 7 days before the day on which the hearing of the proceeding commences, served on the person by whom the proceeding was instituted a notice in writing giving such information that would identify or assist in the identification of the other person as was then in his or her possession.(4) In a proceeding under this Subdivision in relation to a contravention of a provision of Subdivision D or E (sections 12DA to 12ED) committed by the publication of an advertisement, it is a defence if the defendant establishes that he or she is a person whose business it is to publish or arrange for the publication of advertisements and that he or she received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of Subdivision D or E.12FJ Jurisdiction of courts(1) Jurisdiction is conferred on the Federal Court in any matter: (a) arising under this Division; or (b) arising under Part 3 in its application in relation to an investigation of a contravention of this Division;in respect of which a civil proceeding may be instituted under this Subdivision or under Part 3 as so applying.(2) With respect to any matter arising under this Division in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission: (a) the several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject-matter or otherwise; and (b) subject to the Constitution, jurisdiction is conferred on the several courts of the Territories.(3) Nothing in subsection (2) is taken to enable an inferior court of a State or Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory.(4) The jurisdiction conferred by subsection (1) on the Federal Court is exclusive of the jurisdiction of any other court other than the jurisdiction of the several courts of the States and Territories under subsection (2) and the jurisdiction of the High Court under section 75 of the Constitution.12FK Transfer of matters(1) If: (a) a civil proceeding instituted by a person other than the Minister or the Commission is pending in the Federal Court; and (b) a matter for determination in the proceeding arose under this Division;the Federal Court may, subject to subsection (2), upon the application of a party or of the Federal Court's own motion, transfer the matter to a court of a State or Territory and may also transfer to that court any other matter for determination in the proceeding.(2) The Federal Court must not transfer a matter to another court under subsection (1) unless the other court has power to grant the remedies sought before the Federal Court in the matter and it appears to the Federal Court that: (a) the matter arises out of or is related to a proceeding that is pending in the other court; or (b) it is otherwise in the interests of justice that the matter be determined by the other court.(3) If the Federal Court transfers a matter to another court under subsection (1): (a) further proceedings in the matter must be as directed by the other court; and (b) the judgment of the other court in the matter is enforceable throughout Australia and the external Territories as if it were a judgment of the Federal Court.(4) If: (a) a proceeding is pending in a court (other than the Supreme Court) of a State or Territory; and (b) a matter for determination in the proceeding arose under this Division;the court must, if directed to do so by the Federal Court, transfer to the Federal Court the matter and such other matters for determination in the proceeding, as the Federal Court decides, the determination of which would, apart from any law of a State or of the Northern Territory relating to cross-vesting of jurisdiction, be within the jurisdiction of the Federal Court.(5) If: (a) a proceeding is pending in a court (other than the Supreme Court) of a State or Territory; and (b) a matter for determination in the proceeding arose under this Division;the court may, subject to subsection (6), upon the application of a party or of the court's own motion, transfer the matter to a court (other than the Supreme Court) of a State or Territory other than the State or Territory referred to in paragraph (a).(6) The court must not transfer the matter to another court under subsection (5) unless the other court has power to grant the remedies sought in the matter and it appears to the court that: (a) the matter arises out of or is related to a proceeding that is pending in the other court; or (b) it is otherwise in the interests of justice that the matter be determined by the other court.(7) If a court transfers a matter to another court under subsection (5), further proceedings in the matter must be as directed by the other court.12FL Transfer of certain proceedings to Family Court(1) Subject to subsection (2), if: (a) a civil proceeding is pending in the Federal Court; and (b) a matter for determination in the proceeding arises under this Division;the Federal Court may, on the application of a party to the proceeding or of its own motion, transfer the proceeding to the Family Court.(2) A proceeding that is pending in the Federal Court at the commencement of this section must not be transferred to the Family Court unless the parties to the proceeding consent to the transfer.(3) Subject to subsection (4), if a proceeding is transferred to the Family Court: (a) the Family Court has jurisdiction to hear and determine the proceeding; and (b) the Family Court also has jurisdiction to hear and determine matters not otherwise within its jurisdiction (whether under paragraph (a) or otherwise): (i) that are associated with matters arising in the proceeding; or (ii) that, apart from subsection 32(1) of the Federal Court of Australia Act 1976 , the Federal Court would have had jurisdiction to hear and determine in the proceeding; and (c) the Family Court may, in and in relation to the proceeding: (i) grant such remedies; and (ii) make orders of such kinds; and (iii) issue, and direct the issue of, writs of such kinds; as the Federal Court could have in and in relation to the proceeding; and (d) remedies, orders and writs granted, made or issued by the Family Court in and in relation to the proceeding have effect, and may be enforced by the Family Court, as if they had been granted, made or issued by the Federal Court; and (e) appeals lie from judgments of the Family Court given in and in relation to the proceeding as if the judgments were judgments of the Federal Court constituted by a single Judge of that Court, and do not otherwise lie; and (f) subject to paragraphs (a) to (e) (inclusive), this Division, the regulations, the Federal Court of Australia Act 1976 , the Rules of Court made under that Act, and other laws of the Commonwealth, apply in and in relation to the proceeding as if: (i) a reference to the Federal Court (other than in the expression the Court or a Judge ) included a reference to the Family Court; and (ii) a reference to a Judge of the Federal Court (other than in the expression the Court or a Judge ) included a reference to a Family Court Judge; and (iii) a reference to the expression the Court or a Judge when used in relation to the Federal Court included a reference to a Family Court Judge sitting in Chambers; and (iv) a reference to a Registrar of the Federal Court included a reference to a Registrar of the Family Court; and (v) any other necessary changes were made.(4) If any difficulty arises in the application of paragraphs (3)(c), (d) and (f) in or in relation to a particular proceeding, the Family Court may, on the application of a party to the proceeding or of its own motion, give such directions, and make such orders, as it considers appropriate to resolve the difficulty.(5) An appeal does not lie from a decision of the Federal Court in relation to the transfer of a proceeding under this Division to the Family Court.12FM Other orders(1) Without limiting the generality of section 12FD, if, in a proceeding instituted under, or for an offence against, this Division, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of this Division, the Court may, whether or not it grants an injunction under section 12FD or makes an order under section 12FE or 12FF, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contraven tion (including all or any of the orders mentioned in subsection (7) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.(2) Without limiting the generality of section 12FD, the Court may, on the application of: (a) a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of this Division; or (b) the Commission in accordance with subsection (3) on behalf of such a person or persons;make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (7)) if the Court considers that the order or orders concerned will: (c) compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or (d) prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person or persons.(3) If, in a proceeding instituted for an offence against section 12FB or instituted by the Commission or the Minister under section 12FD, a person is found to have engaged in conduct in contravention of a provision of this Division, the Commission may make an application under subsection (2) on behalf of one or more persons identified in the application who have suffered, or are likely to suffer, loss or damage by the conduct. The Commission must not make such an application except with the consent in writing given before the application is made by the person, or by each of the persons, on whose behalf the application is made.(4) An application may be made under subsection (2) in relation to a contravention of this Division notwithstanding that a proceeding has not been instituted under another provision of this Part in relation to that contravention.(5) An application under subsection (2) may be commenced: (a) in the case of conduct in contravention of Subdivision C (sections 12CA and 12CB)—at any time within 2 years after the day on which the cause of action accrued; or (b) in the case of conduct in contravention of Subdivision D or E (sections 12DA to 12ED)—at any time within 3 years after the day on which the cause of action accrued.(6) For the purpose of determining whether to make an order under this section in relation to a contravention of Subdivision C (sections 12CA and 12CB), the Court may have regard to the conduct of parties to the proceeding since the contravention occurred.(7) Without limiting the generality of subsections (1) and (2), the orders referred to in those subsections include the following: (a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after a date before the date on which the order is made; (b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after a date before the date on which the order is made; (c) an order refusing to enforce any or all of the provisions of such a contract; (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage; (e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; (f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage; (g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that: (i) varies, or has the effect of varying, the first-mentioned instrument; or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.(8) The powers conferred on the Court under this section in relation to a contract or covenant do not affect any powers that any other court may have in relation to the contract or covenant in proceedings instituted in that other court in respect of the contract or covenant.(9) In subsection (7): interest , in relation to land, has the same meaning as in subsection 12DC(3).12FN Power of Court to prohibit payment or transfer of moneys or other property(1) If: (a) proceedings have been commenced against a person for an offence against section 12FB; or (b) an application has been made under section 12FD for an injunction against a person in relation to a contravention of a provision of this Division; or (c) an action has been commenced under subsection 12FF(1) against a person in relation to a contravention of a provision of Subdivision D or E (sections 12DA to 12ED); or (d) an application for an order under subsection 12FM(2) or (3) has been or may be made against a person in relation to a contravention of a provision of this Division;the Court may, on the application of the Minister or the Commission, make an order or orders mentioned in subsection (2) if the Court is satisfied that: (e) it is necessary or desirable to do so for the purpose of preserving money or other property held by or on behalf of a person referred to in paragraph (a), (b), (c) or (d), as the case may be (the relevant person ), if the relevant person is liable or may become liable under this Division to pay moneys by way of a fine, damages, compensation, refund or otherwise or to transfer, sell or refund other property; and (f) it will not unduly prejudice the rights and interests of any other person.(2) The orders referred to in subsection (1) are the following: (a) an order prohibiting, either absolutely or subject to conditions, a person who is indebted to the relevant person or to an associate of the relevant person from making a payment in total or partial discharge of the debt to, or to another person at the direction or request of, the person to whom the debt is owed; (b) an order prohibiting, either absolutely or subject to conditions, a person who is holding money or other property on behalf of the relevant person or on behalf of an associate of the relevant person from paying all or any of the money, or transferring, or otherwise parting with possession of, the other property, to, or to another person at the direction or request of, the person on whose behalf the money or other property is held; (c) an order prohibiting, either absolutely or subject to conditions, the taking or sending by any person of money of the relevant person or of an associate of the relevant person to a place outside the State or Territory in which the money is held; (d) an order prohibiting, either absolutely or subject to conditions, the taking, sending or transfer by any person of other property of the relevant person or of an associate of the relevant person to a place outside the State or Territory in which the other property is located; (e) an order appointing, if the relevant person is a natural person, a receiver or trustee of the property or of part of the property of the relevant person with such powers as are specified in the order.(3) Subject to subsection (4), an order under this section may be expressed to operate: (a) for a period specified in the order; or (b) until proceedings under any other provision of this Part in relation to which the order was made have been concluded.(4) An order under this section made on an application ex parte must not be expressed to operate for a period exceeding 30 days.(5) A person who contravenes or fails to comply with an order by the Court under this section that is applicable to the person is guilty of an offence punishable on conviction: (a) in the case of a person not being a body corporate—by a fine not exceeding 200 penalty units; or (b) in the case of a person being a body corporate—by a fine not exceeding 1,000 penalty units.(6) Nothing in this section affects the powers that the Court has apart from this section.(7) This section has effect subject to the Bankruptcy Act 1966 .(8) A reference in this section to a person who is an associate of a relevant person is a reference to: (a) a person holding money or other property on behalf of the relevant person; or (b) if the relevant person is a body corporate—a wholly owned subsidiary of the relevant person.12FO Enforcement of undertakings—Secretary to the Department(1) The Secretary to the Department may accept a written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Secretary has a power or function under this Division.(2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Secretary to the Department.(3) If the Secretary to the Department considers that the person who gave the undertaking has breached any of its terms, the Secretary may apply to the Court for an order under subsection (4).(4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders: (a) an order directing the person to comply with that term of the undertaking; (b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach; (c) any order that the court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach; (d) any other order that the Court considers appropriate. Subdivision G—Miscellaneous12GA Relationship of this Subdivision to Part 3 (1) The powers (and any restrictions on them) in this Subdivision are in addition to any powers the Commission has under Part 3 when investigating a contravention, or suspected contravention, of a provision of this Division. The powers may be used only when the Commission is so investigating.(2) For the purposes of Part 3, an exercise of a power in this Subdivision is taken to be an exercise of that power under, or for the purposes of, Part 3.12GB Disclosure of documents by the Commission(1) If: (a) a proceeding is instituted against a corporation or other person under section 12FD; or (b) an application is made under section 12FE or subsection 12FM(2) or 12FN(1) for an order against a corporation or other person;the Commission must, at the request of the corporation or other person and upon payment of the prescribed fee (if any), furnish to the corporation or other person: (c) a copy of every document that has been furnished to, or obtained by, the Commission in connection with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person; and (d) a copy of any other document in the possession of the Commission that comes to the attention of the Commission in connection with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person;not being a document obtained from the corporation or other person or prepared by an officer or professional adviser of the Commission.(2) If the Commission does not comply with a request under subsection (1), the Court must, subject to subsection (3), upon application by the corporation which, or other person who, made the request, make an order directing the Commission to comply with the request.(3) The Court may refuse to make an order under subsection (2) in respect of a document or part of a document if the Court considers it inappropriate to make the order by reason that the disclosure of the contents of the document or part of the document would prejudice any person, or for any other reason. (4) Before the Court gives a decision on an application under subsection (2), the Court may require any documents to be produced to it for inspection.(5) An order under this section may be expressed to be subject to conditions specified in the order.12GC Prosecutions(1) Prosecutions for offences: (a) against this Division; or (b) against Part 3 in its application in relation to an investigation of a contravention of this Division;must be brought only in the Court.(2) Jurisdiction is conferred on the Court to hear and determine such prosecutions.(3) Proceedings before the Court under this section, other than proceedings instituted by: (a) the Commission; or (b) a person authorised in writing by the Commission; or (c) a person authorised in writing by the Secretary to the Department;must not be instituted except with the consent in writing of the Minister or of a person authorised by the Minister in writing to give such consents.12GD Jurisdiction of Court to make declarations and orders(1) Subject to this section, a person may institute a proceeding in the Court seeking, in relation to a matter arising under this Division or under Part 3 in its application in relation to an investigation of a contravention of this Division, the making of: (a) a declaration in relation to the operation or effect of any provision of: (i) this Division other than the provisions of Subdivision E (sections 12EA to 12ED); or (ii) Part 3 as so applying; or (b) a declaration in relation to the validity of any act or thing done, proposed to be done or purporting to have been done, under this Division or Part 3 as so applying; or (c) an order by way of, or in the nature of, prohibition, certiorari or mandamus;or both such a declaration and such an order, and the Court has jurisdiction to hear and determine the proceeding. (2) The Minister may institute a proceeding in the Court under this section and may intervene in any proceeding instituted in the Court under this section or in a proceeding instituted in any other court in which a party is seeking the making of a declaration or an order of a kind mentioned in subsection (1).(3) In this section, proceeding includes a cross-proceeding.Subdivision H—Transitional12HA Conduct engaged in in relation to financial services before commencement(1) If: (a) conduct was, or may have been, engaged in in relation to financial services before the commencement of this Division; and (b) the conduct contravened, or may have contravened, Part IVA or V of the Trade Practices Act 1974 ; and (c) if the conduct had been engaged in after the commencement of this Division it would have, or may have, contravened this Division;the Commission has, by virtue of this section, the same powers under the Trade Practices Act 1974 in relation to the conduct as the Australian Competition and Consumer Commission.(2) The Commission's power of delegation under section 102 extends to the powers it has under subsection (1).8 Before Division 1 of Part 3Insert:Division 1A—Application of Part 312B Application of Part 3(1) If this Part is being applied as a law of a State, it has no effect in relation to an investigation of a contravention of Division 2 of Part 2.(2) If this Part is being applied in relation to an investigation of a contravention of Division 2 of Part 2: (a) subsection 35(1) has effect as if the words "within this jurisdiction" were omitted; and (b) subsection 37(10) has effect as if the words "a State or the Capital Territory" were substituted for the words "another jurisdiction"; and (c) section 81 has effect as if paragraph (a) were omitted; and (d) section 86 has effect as if the words "of this jurisdiction" were omitted; and (e) subsection 93(2) has effect as if the words "or of this or any other jurisdiction" were omitted.(3) If this Part is being applied in relation to an investigation of a contravention of Division 2 of Part 2, ignore any references in this Part to: (a) a corresponding law; and (b) a corresponding law of another jurisdiction.9 At the end of section 13Add:(6) If the Commission has reason to suspect that a contravention of a provision of Division 2 of Part 2 may have been committed, the Commission may make such investigation as it thinks appropriate.Note: See section 12B on the application of this subsection as a law of a State.10 After section 32Insert:32A Notice to produce books about financial servicesThe Commission may give to: (a) a person who supplies, or has supplied, a financial service; or (b) an eligible person in relation to that person;a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books relating to: (c) the supply of the financial service; or (d) the financial service.11 At the end of section 33Add:; or (c) a matter referred to in paragraph 32A(c) or (d).12 Subsection 34(3)After "32", insert ", 32A".13 Paragraph 49(1)(c)After "jurisdiction", insert ", or Division 2 of Part 2".14 Subsection 63(1)After "32,", insert "32A,".15 Subsection 67(2)After "jurisdiction", insert "or of Division 2 of Part 2,"16 After paragraph 80(1)(b)Insert:or (c) a matter referred to in paragraph 32A(c) or (d); 17 After paragraph 91(1)(b)Insert:or (ba) a person is convicted of an offence against Division 2 of Part 2 in a prosecution; or (bb) a judgment is awarded, or a declaration or other order is made, against a person under Division 2 of Part 2 in a proceeding in a court;18 At the end of subsection 102(2)Add:; or (e) a member of the staff of the Australian Competition and Consumer Commission referred to in subsection 27(1) of the Trade Practices Act 1974 .19 Before subsection 102(3)Insert:(2B) The Commission must not delegate a function or power to: (i) a person referred to in paragraph (2)(e); or (ii) a person engaged under section 27A of the Trade Practices Act 1974 ;unless the Chairperson of the Australian Competition and Consumer Commission has agreed to the delegation in writing.20 Subsection 127(9) (paragraph (a) of the definition of protected information )After "body", insert "or person".21 Subsection 127(9) (paragraph (c) of the definition of protected information )After "body", insert "or person".22 Subsection 246(1)After "national scheme laws", insert ", section 12A or Division 2 of Part 2,".Part 2—Amendment of the Trade Practices Act 197423 Subsection 4(1)Insert: financial product has the same meaning as in Division 2 of Part 2 of the Australian Securities and Investments Commission Act 1989 . financial service has the same meaning as in Division 2 of Part 2 of the Australian Securities and Investments Commission Act 1989 .24 After section 25Insert:26 Delegation by Commission in relation to unconscionable conduct and consumer protection(1) The Commission may, by resolution, delegate any of its functions and powers under or in relation to Parts IVA, V and VI and any of its powers under Part XII that relate to those Parts, to a staff member of the Australian Securities and Investments Commission within the meaning of section 5 of the Australian Securities and Investments Commission Act 1989 .(2) The Commission must not delegate a function or power under subsection (1) unless the Chairperson of the Australian Securities and Investments Commission has agreed to the delegation in writing.25 Before section 51AAInsert:51AAB Part does not apply to financial services(1) Section 51AA does not apply to conduct engaged in in relation to financial services.(2) Section 51AB does not apply to the supply, or possible supply, of services that are financial services.26 Before section 51AInsert:51AF Part does not apply to financial services(1) This Part does not apply to the supply, or possible supply, of services that are financial services.(2) Without limiting subsection (1): (a) sections 52 and 55A do not apply to conduct engaged in in relation to financial services; and (b) if a security (within the meaning of the Corporations Law) consists of or includes an interest in land, section 53A does not apply to that interest; and (c) section 63A does not apply to a debit card that allows access to an account that is a financial product.(3) In subsection (2): debit card has the same meaning as in section 63A.27 Subsection 73(1)After "section 74", insert "of this Act or section 12ED of the Australian Securities and Investments Commission Act 1989 ".28 Subsection 73(2)After "section 74", insert "of this Act or section 12ED of the Australian Securities and Investments Commission Act 1989 ".Schedule 3—Amendment of the Corporations LawPart 1—Changing "Australian bank" to "Australian ADI" 1 Amendment of the Corporations LawThe provisions of the Corporations Law specified in this Part are amended by omitting "Australian bank" (wherever occurring) and substituting "Australian ADI".Note: The headings to sections 897, 931 and 1230 are altered by omitting "bank account " and substituting "ADI account ".2 Section 9 (paragraph (a) of the definition of banker's books )3 Section 9 (subparagraph (a)(i) of the definition of clients' segregated account )4 Section 9 (paragraph (i) of the definition of managed investment scheme )5 Subparagraph 65(1)(b)(iii)6 Subparagraph 324(3)(a)(i)7 Paragraph 362(2)(b)8 Subparagraph 362(2)(c)(iii)9 Subsections 362(9) and (10)10 Paragraph 421(1)(a)11 Paragraph 437D(3)(a)12 Subparagraph 448C(2)(a)(i)13 Paragraph 468(2)(b)14 Subparagraph 532(3)(a)(i)15 Subsection 601DE(1)16 Subparagraph 857(4)(a)(i)17 Paragraph 866(1)(a)18 Paragraph 872(2)(a)19 Subsection 873(3)20 Paragraph 891(1)(a)21 Section 89722 Section 93123 Paragraph 1052(1)(f)24 Paragraphs 1083(1)(a) to (c)25 Paragraph 1083(3)(b)26 Sub-subparagraph 1209(5)(d)(iii)(A)27 Subsection 1215(1)28 Subparagraph 1215(4)(a)(i)29 Subsection 1218(2)30 Section 1230Part 2—Other changes31 Section 9Insert: Australian ADI means: (a) an ADI (authorised deposit-taking institution) within the meaning of the Banking Act 1959 ; and (b) a person who carries on State Banking within the meaning of paragraph 51(xiii) of the Constitution.32 Section 9Insert: bank or banker includes, but is not limited to, a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 .33 Section 9 (paragraphs (b) to (d) of the definition of banker's books )Omit "Australian bank's" (wherever occurring), substitute "Australian ADI's".34 Section 9 (paragraph (c) of the definition of debenture )Repeal the paragraph, substitute: (c) a document issued by an Australian ADI in the ordinary course of its banking business that evidences or acknowledges indebtedness of the ADI arising in the ordinary course of that business;35 Section 9 (paragraph (j) of the definition of participation interest )Repeal the paragraph, substitute: (j) a document issued or executed by an Australian ADI in the ordinary course of its banking business, being a document that evidences or acknowledges indebtedness of the ADI arising in the ordinary course of that business; or36 Section 9 (definition of payment order )Omit ", bank cheque", substitute "(including a cheque that a bank or other institution draws on itself)".37 Paragraph 437D(3)(b)Omit "bank's", substitute "ADI's".38 Subparagraph 437D(3)(c)(i)Omit "bank", substitute "ADI".39 Paragraph 461(j)Omit "the Insurance and Superannuation Commissioner", substitute "the Australian Prudential Regulation Authority".40 Paragraph 462(2)(h)Repeal the paragraph, substitute: (h) the Australian Prudential Regulation Authority.41 Subsection 462(3)Omit "the Insurance and Superannuation Commissioner", substitute "the Australian Prudential Regulation Authority". 42 Subsection 870(3)Omit "or bank cheque", substitute ", or by cheque that a bank or other institution draws on itself,".43 Subsection 1015A(2)Repeal the subsection.44 Paragraph 1083(1)(b)Omit "the bank", substitute "it".45 Paragraph 1083(1)(c)Omit "the bank", substitute "it".46 Subsection 1083(3)Omit "the bank", substitute "the ADI".47 Subsection 1083A(2)Repeal the subsection.These amendments effectively seek to move the consumer protection provisions which are comparable to the Trade Practices Act provisions into the Corporations Law.3M6MURRAYSenator Murray—Just some clarification, Mr Chairman: which particular sheet are we attending to now?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Ferguson)—We are looking at government amendments (3), (1) and (2) which are on sheet 239WB, and you have three amendments to those.3M6MURRAYSenator Murray—Yes. I had the impression that 239 had already been approved by the Senate.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Ferguson)—I need some guidance.H15CAMPBELLSenator Ian Campbell—For that guidance, schedule 3 is consequential and it does things like changing references in the law from `Australian bank' to `authorised deposit taking institution'. The main policy thrust of this is shifting the consumer protection provisions from the Trade Practices Act into the Corporations Law. That is what the schedule 2 changes are; the schedule 3 are minor and consequential.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Murray, I think your three amendments amend the government's amendment. Do you want to seek leave to move those together and move them now?3M6MURRAYSenator Murray—Yes, I think that is appropriate. I should indicate before commen cing that we and the government have been going backwards and forwards in trying to arrive at a final version. As I understood it, one of their advisers was cobbling together something which may be a little different. If that position has not been arrived at, then I will move what is before me.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—I would just advise you, Senator Murray, that sheet 102 has been revised also.15:06:003533Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—In respect of government amendment No. 3, I move:(1) At the end of subsection 12BC(1), add: ; or (c) if the services were acquired by a person within the meaning of subsection (1A) and the price of the services exceeded the prescribed amount—the services were of a kind ordinarily acquired for business use.(2) After subsection 12BC(1), insert: (1A) For the purposes of this Division, person includes: (a) a person or corporation employing fewer than 20 people; or (b) if the person or corporation is engaged in the manufacture of any goods—a person or corporation employing fewer than 100 people.I indicated in my speech during the second reading debate that the Australian Democrats were concerned with the short notice that the Senate was being given to consider these extremely significant government amendments to this particular bill. They are rather weighty, as you can see. We certainly consider that, with only three days of public exposure for 39 pages of amendments—an inadequate public exposure—it would be almost impossible for senators without significant resources to be confident that all the provisions of that law were appropriate. I will be interested to see how the opposition feels about that. But we have felt that it would be unreasonable in the circumstances to hold up the Wallis package. We know it is very dear to the government and it has our broad support, so we do not find anything over which we are going to dig our heels in.The amendments we are referring to here really relate to a number of matters. Some of them will transfer consumer protection from the ACCC to ASIC and they can be separated from the changes to prudential regulation and industry efficiency, which are at the heart of this package of bills. As Mr Wallis said:The goals intended for these amendments could be achieved through different mechanisms by ministerial direction rather than legislative change.Nonetheless, if it be the consensus of the committee that these government amendments be made, we are certainly not going to stand in the way. If there are any problems, we hope the government will come back and amend them shortly thereafter.We have found some problems with this legislation, the Financial Sector Reform (Consequential Amendments) Bill 1998 . For example, we think that, while the Crown is bound in respect of the Commonwealth, it is not clear whether state instrumentalities and authorities are bound. I wonder, parliamentary secretary, if you could comment on that when you reply to the remarks I have made because it is not clear to us. Other questions have been raised as to whether the ASIC will have the powers to undertake the actions which it has been asked to do.Importantly, the amendments do not seem to completely mirror the measures of the Trade Practices Act in the important respects of not incorporating the measures recently passed through the fair trading amendments. I would appreciate it, parliamentary secretary, if you would respond on that basis as to why and what the situation is there.The unconscionable conduct protection in this package of bills does not appear to extend to small business. As you know, parliamentary secretary, it is the government's clear intention to now extend unconscionable conduct provisions to small business, so once again I would appreciate your response. The measures do not allow for industry codes of conduct to be prescribed, yet the trade practices/fair trading amendments did do just that—they wanted that to happen—so perhaps you would remark on that.In relation to broad consumer protection, we understand it was not the government's intention to include small business, but we believe it was Wallis's intention. We consider that, given the clear problems small business can have and does have with the financial sector, it is essential that it have access to inexpensive dispute resolution and that it be covered by the unconscionable conduct measures. I remind you, parliamentary secretary, of the remarks I made in my speech during the second reading debate where I indicated that a survey had established that something like 75 per cent of all small businesses had had problems with banks of one kind or another. I indicated to you that, if you extrapolated that out mathematically, that turned out to be about 700,000 small businesses, so it is not a minor problem.We are moving in our amendments to include small business under the broad consumer protection measure of these amendments. That is the purpose of amendments 1 and 2, which we have moved by leave together. The government has also asked that we trust that, through legislative and non-legislative measures, consumer protection measures can be delayed until CLERP is worked through. With the delays that an election will cause, we do not see that as desirable. We think there is a possibility that these matters will not again be attended to until late in 1999—but it remains to be seen if that is true. We do not see it as reasonable that consumer protection measures are delayed as a lower priority while measures to improve industry efficiency are legislated as urgent. We think that shows the priorities as being misplaced.We would like, through our amendments, to require that ASIC be responsible for accrediting industry codes of conduct which include industry dispute resolution by requiring that participating companies are parties to an accredited industry code of conduct and dispute resolution processes. The government said to us that the Corporations Law already includes some of these matters and that this definition that we are proposing an amendment to would in fact restrict it more.Our reading of the law was not that it would restrict it more but that, for the purposes of this division, `person' would include those items—in other words, it is additional too, it is merely establishing or verifying the fact that small businesses are so described. We have deliberately put that in because that is the small business definition from ABS and we want to make it explicit that small business is included in the matter. We certainly do not see it as excluding the intentions of the Corporations Law. Perhaps, parliamentary secretary, between you and your advisers you can respond on that basis. I feel I have given you a long list of questions as well as our approach. I would appreciate your response, parliamentary secretary.15:14:003534Cook, Sen PeterSenator COOKRF4WAALP00—Can I go first of all to the copious amendments, as I comprehend them, moved by the government. Document 239 runs for 39 pages. These amendments, I am advised, are amendments which put into this bill the Trade Practices Act provisions that enable this bill to have power of enforcement. The opposition supports that. This bill will ensure that the consumer protection provisions of the ACCC apply in this sector.We have one concern which I will express now. It does not go to the point of resisting the amendments; we will support them, as I have said. But look at what is being effected here: the Australian Competition and Consumer Commission is giving authority and power for the financial sector to ASIC—we are taking out of the ACCC overarching power for everything and putting some of this power for the financial sector into a discrete piece of legislation. That is my understanding of what is happening. While we will support it for the financial sector, my concern is that it does generate some envy among other sectors.It is possible to contemplate that, say, the food industry or some other sector might say, `Can we too be exempted from the ACCC and be given our discrete act?' If that starts to happen then you break down the important role the ACCC plays and you create an area for smart lawyers to try to find the differences between all of those sector provisions and play on the margins to escape prosecution or the enforcement power of this sort of legislation. I ask the government to briefly comment on that. I would appreciate having them on the record about that concept.15:17:003535Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—In relation to bringing the consumer protection provisions of the Trade Practices Act under the Corporations Law and ensuring that you have consumer protection under a financial sector single regulator, the very point that Senator Cook makes about smart lawyers trying to pick differences between the two pieces of legislation and regulatory regimes is very much the issue that we are seeking to solve here. The best illustration of it is in the area of the Corporations Law where you have specific disclosure requirements and specific remedies if you do not comply with those disclosure requirements. A lawyer could defend an action in relation to those provisions of the Corporations Law and convince a court that everything is in compliance with the law and then another lawyer can come along and say, `Okay, you are off the hook in relation to the Corporations Law; now let's try you under the Trade Practices Act.' So you have a serious double jeopardy situation.The other explanation I make is that there is a difference between consumer products such as food or motor vehicles and the corporations and financial sector where you are seeking to form corporations, finance corporations, raise money for corporations and merge and acquire corporations—you are effectively dealing with entities, the financing of entities and the other consumer provisions that might then apply to those entities when they seek to provide goods or services to the world at large. Given the short time available, I hope that is sufficient explanation of the thinking behind ensuring the consumer protection provisions in relation to the financial sector are enforced and applied by a single financial regulator, the ASIC.I turn to the points raised by Senator Murray. I hope I can give a comprehensive answer to those inquiries and questions. Taking the last point first, in relation to the definition of `person' there is no doubt that under the ASIC Act the definition is much broader than that which would apply if Senator Murray's amendment were to succeed. The amendment purports to extend the definition of consumer to cover what are essentially small incorporated businesses. Because the government's amendments will be in the ASIC Act, the definitions in the Corporations Law will apply to the amendments. Under the Corporations Law, references to natural persons include references to bodies corporate and vice versa. A person in proposed section 12BC will therefore include bodies corporate. Accordingly, the Democrats' proposed amendment would narrow the operation of the existing provision rather than extend it, which I understand is their intention to do.Senator Murray also referred to the problem associated with 39 pages of amendments and asked questions about the amendments passed in this place relating to fair trading and unconscionable conduct. We believe that these provisions bring under the financial sector regulator and under this legislative regime those provisions that are necessary in fulfilling those functions. There are similar provisions to those which he refers to, but the provisions that we passed through this place as a result of the fair trading inquiry stay with the ACCC and are unaffected. The government does not believe that those areas are necessary for the financial sector regulator.In terms of the prescription in relation to industry codes, we have had some helpful discussions about how we go about that. I said in my second reading speech that the government is progressing industry codes in the financial sector through the corporate law economic reform program, particularly policy paper No. 6, which goes into some detail about industry codes. We are very keen not to prescribe the detail of those industry codes in the legislation. The Australian Securities Commission is actively negotiating with industry sectors that are not already covered by codes. Those codes will be developed and CLERP—the corporate law economic reform program—paper No. 6 has committed the government to introducing legislation which will provide a competitively neutral regulatory regime which will bring industry codes under the Australian Securities Commission and ensure that compliance with them is monitored by the Australian Securities Commission.We believe that that is by far the best way to go. Industry is cooperating with the Australian Securities Commission and the Commonwealth government in relation to these codes and a whole range of matters relating to the operation of those industries in the new regime. We believe that that process will achieve results far more quickly than bringing in a very blunt instrument in relation to mandating and prescribing what those industry codes should be in the legislation. We think it is far more appropriate for the Securities Commission to work with industry on those codes.15:23:003536Cook, Sen PeterSenator COOKRF4WAALP00—I want to try to expedite this bill and get it through by the time we rise, but I did not mention before that the opposition will support Democrat amendments Nos 1 and 2 which I think you are about to put to the chamber.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Ferguson)—The question is that Democrat amendments Nos 1 and 2, which are amendments to government amendment No. 3, be agreed to.Question resolved in the affirmative.15:24:003536Murray, Sen AndrewSenator MURRAY3M6WAAD00—In respect of government amendment No. 3, I move:(3) Omit subsection 12ED(3).This is a further minor amendment which moves to omit section 12ED(3), which provides that the warranty concerning financial services does not extend to insurance contracts. There is no reason why insurers should be treated differently from providers of other financial services, and arguably the duty of care is included within the general duty of good faith owed by insurers to insured, but this has not been proved. That is the motive for that amendment.15:24:003536Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—The government will oppose this. We have described why in some detail to Senator Murray and his advisers. The government has this matter under review. We actually have a report from the ACCC on this matter. We have made it quite clear to the Democrats in private discussions that the government is sympathetic to this. We want to ensure that there are no unintended consequences from moving down this path. We have only just received the report from the ACCC.We would like to ensure that the policy processes, as with all corporate law matters and financial sector matters, are very carefully considered and that industry is consulted so that there are no unintended consequences. We have just described in relation to the definition of persons that there will be an unintended consequence; that is, that it will narrow the definition of persons, but the Senate has just supported that amendment. But in this case we have a policy process in place and that policy process should be allowed to work. Even though we say that we are sympathetic to the intention of the amendment, we will be opposing it at this stage.15:25:003536Cook, Sen PeterSenator COOKRF4WAALP00—The opposition will oppose this amendment for much the same reasons as the government.15:26:003536Murray, Sen AndrewSenator MURRAY3M6WAAD00—I think the government's reasons are appropriate and, accordingly, I seek leave to withdraw the amendment.Leave granted; amendment withdrawn.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—We will move to Deomcrat amendment No. 4, sheet 102 revised 2.15:26:003536Murray, Sen AndrewSenator MURRAY3M6WAAD00—In respect of government amendment No. 3, I propose to move:(4) Amendment (3), after subdivision E, insert:Subdivision EA—Alternative dispute resolution12EDA Corporations to be party to alternative dispute resolution procedures A corporation must not, in trade or commerce, supply financial services unless the corporation is a party to a relevant industry code, approved by the Commission, containing procedures for alternative dispute resolution. 12EDB Industry codes to be approved by Commission (1) For the purposes of this Division and subject to subsection (2), the Commission must approve an industry code if it contains procedures for alternative dispute resolution. (2) The Commission must not approve an industry code under subsection (1) unless the Commission is satisfied with the procedures for alternative dispute resolution, having regard to any of the following guidelines: (a) they do not permit a complaint or dispute to be considered unless it has first been lodged with the relevant corporation and: (i) has been resolved by the corporation, but not to the satisfaction of the complainant; or (ii) has not been resolved by the corporation and 90 days have elapsed since the complaint or dispute was lodged; (b) they provide for any systemic, persistent or deliberate conduct to be reported to the Commission; (c) they operate free of charge to the complainant; (d) they cover a sufficiently broad range of complaints, with the terms of reference of the scheme to be determined after consultation with consumer organisations and the Commission; (e) they provide for independence from the parties to the complaint; (f) they are overseen by a body which includes consumer representation (appointed or approved by the Minister with responsibility for consumer affairs) and a person appointed by the Commission; (g) they accord with the principles of natural justice (including that information used by the decision-maker is provided to the complainant unless prohibited by law, and that reasons for decisions are given in writing); (h) they provide for decisions to be made by reference to what is fair in all the circumstances, observing applicable law and relevant judicial authority and having regard to good practice in the relevant industry; (i) they have appropriate published procedures, including suitable standards of timeliness; (j) they include arrangements for appropriate promotion of the procedures; (k) they are supported by adequate resources, including staff whose responsibility is to assist consumers in making their complaints, if necessary by investigating the conduct of a financial services provider; (l) decisions made under them will be observed by the relevant corporations; (m) they provide adequate remedies; (n) they provide for the maintenance and publication of appropriate statistics on its operations; (o) they provide for the provision to the Commission and the relevant industry associations, details of the decisions made in respect of all complaints, or a representative selection of complaints, including the reasons for the decisions but excluding any information that would identify any of the parties to the complaint. (3) The Commission may revoke an approval given under subsection (1) if the Commission is satisfied that the code no longer meets, or substantially meets, the requirements of subsection (2).On this amendment, I record and register my thanks to the government for being of assistance in arriving at a form of words which meet our needs whilst, as I understand it, mitigating some of the concerns the government had. The government—and I understand all political parties—is very keen to see dispute resolution procedures advanced in our society in the interests of a non-litigious, cheap and rapid resolution of disputes in whatever industry or circumstance they may occur. The commission is being required to approve industry codes and it was our view that industry codes should include alternative dispute resolution.Our original amendment really was prescriptive. The government has said to us that it would prefer it if the process were indicative, so if you turn to amendment No. 4 on sheet 1012, revised 2, item 2, you will see that the words that we had there originally have now been changed to:The Commission must not approve an industry code under subsection (1) unless the Commission is satisfied with the procedures for alternative dispute resolution—So the first thing is that they must be satisfied that those procedures are adequate—having regard to any of the following guidelines:The reason that we have changed it to `having regard to all those guidelines' is that neither we nor possibly anyone else can foresee every circumstance and every basis on which dispute resolution elements should be outlined. We thought that we should leave flexibility to the commission, but that we should clearly indicate the Senate's indicative list of desirable elements which are required in alternative dispute resolution. That is the change we have made and it is a substantial change. I presume that any reaction from the government will really be on technical matters rather than on principle, because I gather that it is very keen on dispute resolution. I would appreciate hearing the reactions of the government and the opposition to this amendment.15:29:003538Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I think the Labor Party was going to move an amendment on page 1022 that would amend Democrat amendment No. 4. I think that would be helpful at this stage.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—I must put the Democrat amendment first.15:30:003538Murray, Sen AndrewSenator MURRAY3M6WAAD00—For the assistance and guidance of the Senate, I indicate that the government has indicated some concerns with timing and immediacy on this. If my amendment gets up, and only if it gets up, it would be my intention to move to the Senate that this provision would commence only on 1 March 1999, which would give you a time frame for the ASC and so on to operate in. If I recall correctly, you were concerned about the consequences of this coming into play immediately. That is what I will move if my amendment gets up.15:30:003538Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—I think we might be able to speed things up by saying the govern ment is strongly opposed to the wording of the motion in its current form. One of the consequences of it would be that if this became law in the next few days anyone who was giving superannuation advice in Australia would not be allowed to practise the day after it became law. We would be in a position of not opposing this—just to speed things up—if we were to delete 12EDA, that is in section 4 of the amendment. That reads:Corporations to be party to alternative dispute resolution procedures.It says:A corporation must not, in trade or commerce, supply financial services unless the corporation is a party to a relevant industry code, approved by the Commission.Senator Murray is seeking to make that easier by saying that it would not start until 1 March 1999 but I assure him that people in that industry would probably still be extremely nervous, even about that date. So we would seek to amend it by deleting those words, 12EDA. We would also seek to remove, on page 2 at the top, clause 1 which reads:For the purposes of this Division and subject to subsection (2), the Commission must approve an industry code if it contains procedures for alternative dispute resolution.We would renumber (2) to make it (3) at the top of page 2. We would then delete the words `under subsection (2)', which appears on the top line of the newly renumbered (3). It is under subsection (1) at the moment and we will delete that. Then, in (3), which we renumbered to read (4), we will change the numbering from (1) to (2), so it will become subsection (2). Accordingly, I so move.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Campbell, it is becoming very difficult for the clerks to follow.H15Campbell, Sen IanSenator IAN CAMPBELL—It will make sense if Labor move their amendment, so I think we should offer Labor leave to do so.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Murray, would you care to postpone your amendment so that Labor can move theirs, and then see where we are at the end of that?15:34:003539Murray, Sen AndrewSenator MURRAY3M6WAAD00—I hope my delight is not falsely established but I think it is the first time ever that I have been ahead of the clerk. I thought I followed all that. I think it will be helpful to Senator Cook and Senator Ian Campbell if I indicate that the Democrats will accept the government's proposed amendments as outlined to me. I postpone my amendment.15:34:003539Cook, Sen PeterSenator COOKRF4WAALP00—In respect of government amendment No. 3, I move:After Subdivision E, insert:Subdivision EA—Alternative dispute resolution12EDA Industry Codes to be approved by Commission (1) The Commission has the function of monitoring and promoting market integrity and consumer protection in relation to: (a) the Australian financial system; and (b) the provision of financial services. Without limiting paragraph (b), the Commission has the function of promoting the adoption of, and approving and monitoring compliance with, industry standards and codes of practice (including standards and codes in relation to the resolution of disputes between the providers of financial services and consumers).Senator Murray, could you indicate to us whether, given your advice now to the chamber that you will support the changes made to your earlier amendment by Senator Campbell, you will also support our amendment?3M6MURRAYSenator Murray—The answer is in the affirmative.Question resolved in the affirmative.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Murray, do you wish to move your amendment in an amended form or do you wish to withdraw it?15:35:003539Murray, Sen AndrewSenator MURRAY3M6WAAD00—I will stand by my amendment, as originally put, subject to the amendments outlined by the government. I will repeat them so that you understand that the mover understands them. As I understood the government, they said the following: with regard to item (4), on sheet 1012 revised 2, the words beginning `12EDA' and ending at `resolution' on page 1 would be deleted; with regard to page 2, the paragraph (1) would be deleted; with regard to paragraph (2), it would be renumbered as (3); with regard to what is on my sheet as item (2), the words `under subsection (1)' would come out so it would read `an industry code unless'; item (3) at the bottom of page 2 would be renumbered to (4); and, on page 2, at the bottom `under subsection (1)' would also come out. That is my understanding of the government's amendment.H15CAMPBELLSenator Ian Campbell—Could I have clarification of one point: has the word `requirements' on the bottom of that page been changed to `guidelines'?3M6Murray, Sen AndrewSenator MURRAY—Yes, that is accepted. I move:At the end of section 12EDA, add: (2) The Commission must not approve an industry code under subsection (1) unless the Commission is satisfied with the procedures for alternative dispute resolution, having regard to any of the following guidelines: (a) they do not permit a complaint or dispute to be considered unless it has first been lodged with the relevant corporation and: (i) has been resolved by the corporation, but not to the satisfaction of the complainant; or (ii) has not been resolved by the corporation and 90 days have elapsed since the complaint or dispute was lodged; (b) they provide for any systemic, persistent or deliberate conduct to be reported to the Commission; (c) they operate free of charge to the complainant; (d) they cover a sufficiently broad range of complaints, with the terms of reference of the scheme to be determined after consultation with consumer organisations and the Commission; (e) they provide for independence from the parties to the complaint; (f) they are overseen by a body which includes consumer representation (appointed or approved by the Minister with responsibility for consumer af fairs) and a person appointed by the Commission; (g) they accord with the principles of natural justice (including that information used by the decision-maker is provided to the complainant unless prohibited by law, and that reasons for decisions are given in writing); (h) they provide for decisions to be made by reference to what is fair in all the circumstances, observing applicable law and relevant judicial authority and having regard to good practice in the relevant industry; (i) they have appropriate published procedures, including suitable standards of timeliness; (j) they include arrangements for appropriate promotion of the procedures; (k) they are supported by adequate resources, including staff whose responsibility is to assist consumers in making their complaints, if necessary by investigating the conduct of a financial services provider; (l) decisions made under them will be observed by the relevant corporations; (m) they provide adequate remedies; (n) they provide for the maintenance and publication of appropriate statistics on its operations; (o) they provide for the provision to the Commission and the relevant industry associations, details of the decisions made in respect of all complaints, or a representative selection of complaints, including the reasons for the decisions but excluding any information that would identify any of the parties to the complaint. (3) The Commission may revoke an approval given under subsection (1) if the Commission is satisfied that the code no longer meets, or substantially meets, the guidelines of subsection (2).25:37:003540Cook, Sen PeterSenator COOKRF4WAALP00—Could be clear on this. We are about to put this to a vote—let us not regret it afterwards. My understanding of what Senator Campbell moved was that at the bottom of the second page, number (3) becomes (4) and the sentence then reads: `The commission may revoke an approval given under subsection'—what appears now as (1) and what goes in in its place is (2)—`if the commission is satisfied' and it goes on `the guidelines of subsection (2)'.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—And subsequently meets the guidelines of subsection 2. The question is that Democrat amendment No. 4, as amended, be agreed to.Question resolved in the affirmative.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—The question now is that government amendments Nos 1, 2 and 3, as amended, be agreed to.Question resolved in the affirmative.15:38:003540Murray, Sen AndrewSenator MURRAY3M6WAAD00—Mr Temporary Chairman, we have progressed very well. There was one addition which the government was willing to consider and that was an annual reporting requirement which they had drafted. If that is available, I would appreciate them moving it and we can get on with that.15:39:003540Campbell, Sen IanSenator IAN CAMPBELLH15WALP10—It was suggested that the Democrats might move it. Has it been circulated? It is in Senate cyberspace. We will do it here. I was going to get you to do it, Senator Murray, but it is a long walk over there. It is late on Friday and it has been a long week.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—And time is short.H15Campbell, Sen IanSenator IAN CAMPBELL—The amendment seeks to insert in section 138 of, I think, the ASIC act a new provision 4, which already provides for the commission to report. We are really saying that we want the commission to report on this, and we are very earnest about it. I move:Schedule 2, after item 21, insert:21A At the end of section 138Add:(4) In relation to the Commission's functions under subsection 12EDA(1) the report must include information about the commission's monitoring and promotion of market integrity and consumer protection in relation to:(a) the Australian financial system; and (b) the provision of financial services. Amendment agreed to.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Is it the wish of the committee that the remaining bills be taken together?Leave granted.AUTHORISED NON-OPERATING HOLDING COMPANIES SUPERVISORY LEVY IMPOSITION BILL 1998SUPERANNUATION SUPERVISORY LEVY IMPOSITION BILL 1998FINANCIAL INSTITUTIONS SUPERVISORY LEVIES COLLECTION BILL 1998PAYMENT SYSTEMS (REGULATION) BILL 1998FINANCIAL SECTOR (SHAREHOLDINGS) BILL 1998Bills agreed to.Authorised Deposit-taking Institutions Supervisory Levy Imposition Bill 1998, Retirement Savings Account Providers Supervisory Levy Imposition Bill 1998 , Life Insurance Supervisory Levy Imposition Bill 1998 , General Insurance Supervisory Levy Imposition Bill 1998 reported with requests; Australian Prudential Regulation Authority Bill 1998 , Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 , Financial Sector Reform (Consequential Amendments) Bill 1998 reported with amendments; Authorised Non-operating Holding Companies Supervisory Levy Imposition Bill 1998 , Superannuation Supervisory Levy Imposition Bill 1998 , Financial Institutions Supervisory Levies Collection Bill 1998 , Payment Systems (Regulation) Bill 1998 , Financial Sector (Shareholdings) Bill 1998 reported without amendments or requests; report adopted.Bills reported with amendments and requests; report adopted.3541 Australian Prudential Regulation Authority Bill 1998 , Authorised Non-operating Holding Companies Supervisory Levy Imposition Bill 1998 , Superannuation Supervisory Levy Imposition Bill 1998 , Financial Institutions Supervisory Levies Collection Bill 1998 , Financial Sector Reform (Amendments and Transitional Provisions) Bill 1998 , Payment Systems (Regulation) Bill 1998 , Financial Sector (Shareholdings) Bill 1998 , Financial Sector Reform (Consequential Amendments) Bill 1998 (on motion by Senator Ian Campbell) read a third time.Adjournment354110000PRESIDENTThe PRESIDENT—Order! It being 3.45 p.m., I propose the question:That the Senate do now adjourn.354115:45:003541Heffernan, Sen BillSenator HEFFERNANC16NSWLP10—Recently I made a speech in which I highlighted the code of silence which protects worldwide child sex networks, in particular, Australian paedophile networks. These networks include people in the judiciary, parliament, clergy and the Public Service. Many of these people live in an abhorrent culture in which is included, as a spoils of office, the right to have sex with children. These people put themselves at continual risk of serious compromise in their work places as perpetrators, as too do those people who knowingly ignore or turn a blind eye to this ultimate betrayal of our children.Honourable senators should be concerned at recent developments involving the Criminal Justice Commission, the body set up to investigate official corruption in Queensland after the Fitzgerald inquiry. One of the senior members of this body, Mr Bob Hailstone, a former priest and manager of the ABC in Brisbane, and director of the corruption prevention division of the CJC, has left the CJC in what could only be called exceptional circumstances.In November last year a Queensland police paedophilia task force raided Hailstone's house at 31 Dudley Street, Bardon and took possession of a great deal of obscene material. Last week Charles Goh, a man who lives with Hailstone at 31 Dudley Street, appeared in the Brisbane Magistrates Court on charges of possessing for sale indecent or obscene material.These charges raise serious issues of concern. I have in my possession a letter which I will now read into the public record, and which records disturbing incidents alleged to have occurred at Mr Hailstone's house. The letter was written by a man, Mr Phillip Wood, shortly before he died. Hailstone recently resigned from the CJC rather than face disciplinary charges including association with an inappropriate person. It seems to me that the whole period of Hailstone's service with the CJC should be examined, particularly as this body has failed in the past to investigate paedophilia allegations. The letter written to a Brisbane solicitor reads as follows:Dear John,This is my account of the incident on 30th June 1996.On 30th June 1996 I attended a luncheon party at the home of Mr. Robert Hailstone, 31 Dudley Street, Rainworth. In attendance were a total of fourteen persons, including Mr. Robert Hailstone:—it then mentions a second and third person—the others I either didn't know or can't remember their names. During the course of the luncheon, some of the guests and the host were talking about having sex with young Asian boys, especially during their holidays in Thailand. This conversation was somewhat disturbing to me as I regard pederasty as anathema but I said nothing. Later on the conversation was about the church and their involvement in it, some of the group having been to church that day. This triggered a hostile reaction in me and I asked them how they could be involved in an institution that so vocally condemns homosexuality. This prompted an outburst of abuse by one of their number to me, with me responding by calling them a bunch of churchgoing pedophiles and saying that they should be outed (meaning to publicly expose them). I then left the house. As I was reversing out of the driveway (there were a number of cars parked there) I clipped the wing mirror of one of the cars. This bought the lot of them out onto the driveway, shouting abuse and kicking the drivers side of my car breaking the drivers side window. I was bleeding from the broken glass and being physically attacked by a number of persons. In an attempt to escape I reversed into a tree and drove into the side of a car parked in the driveway. In the melee that followed one of their number managed to turn off the ignition of my car and remove the key. I was than left alone in my car whilst they huddled together a few metres away. I used a spare key and drove out of the driveway. I was covered in glass and blood and very shaken up but I drove to my home in Victoria Point without incident. I had arrived at the luncheon at approx. 12:15pm and arrived at my home at 3:30pm.Mr. Robert Hailstone, who is a director of the C.J.C. had stated to me on a couple of occasions that he could have anyone in Queensland arrested on a trumped up drug charge. With this in mind l was afraid to report the incident to the police.l paid for the repairs to the side of my car ($920.00) and made two seperate claims to the NRMA insurance company for the damage to the front ($2785.18) and rear ($870.89) of my car.I hope that this account is comprehensive enough.Yours sincerely,Phillip J. WoodMadam President, this letter was dated 8 November 1996. Mr Wood was found dead in his home on 10 November 1996.354215:48:003542Cooney, Sen BarneySenator COONEYSF4VICALP00—I will make one comment about what Senator Heffernan has just said. He is a person who very correctly, properly and rightly is outraged by the fearful crime of paedophilia. The only point I have to make is that this is such an abhorrent crime that people should be declared guilty of it only after the due process of the law has found them so. Due process is about making sure that people whom we say are guilty of a crime, particularly when it is an abhorrent crime, are in fact so.I wish to table with the agreement of the Senate a report of my visit to South Africa from 23 April this year to 30 April this year, not because I expect it to be read widely, if at all, but under the new rules we have to table these reports with the Special Minister of State, Senator Minchin. I have no objection to that. I took it over there and was very well treated by Katrina Hodgkinson, whom I must mention because she was so efficient and pleasant about looking after my affairs.I left here very rapidly for my visit and I should acknowledge the assistance given to me at that time by my Whip, Senator Chris Evans, who made a difficult situation much better than it would otherwise have been. I simply ask for leave to table this report.Leave granted.15:51:003542Senate adjourned at 3.51 p.m. until Monday, 22 June 1998, at 12.30 p.m.Answers to Questions on Notice3543The following answers to questions were circulated:3543(Question No. 1128)11283543Neal, Sen BelindaSenator NealB36NSWALP00 asked the Special Minister of State, upon notice, on 6 April 1998:Has the Member for Paterson, Mr Baldwin, relocated his electorate office within the past 4 months; if so: (a) where to; (b) who owns the leased building; (c) what is the period of the lease and any options attached to it; (d) who decided on the location of the office; (e) who negotiated the lease; (f) what is the total floor space leased; (g) what was the term of the lease on the previous premises; (h) what was the cost of sign writing; and (i) what is the average cost of electorate office sign writing.3543Minchin, Sen NickSenator MinchinJX4SALPSpecial Minister of State;Minister Assisting the Prime Minister10—The answer to the honourable senator's question is as follows:Yes, Mr Baldwin moved into his new electorate office on 4 February 1998(a) 11 Mitchell Drive East Maitland.(b) the leased building is owned by EC Close Pty Ltd.(c) the lease term is 3 years from 1 January 1998 with a 3 year option.(d) as Special Minister of State I agreed to the location of the office following advice from my Department on options.(e) the lease was negotiated by Knight Frank Price Waterhouse on behalf of the Commonwealth.(f)the total floor space leased is 177.9 square metres.(g) the lease on the previous premises was for three years with a three year option. The lease expired in July 1996 and was then on a month to month basis.(h) the cost of signage was $2,320, and because of the size and location of the building, installation costs of $750 were incurred.(i) the average cost of signage including installation costs for financial year 1996/97 is $792. However buildings differ in their physical features and each building location presents its own set of requirements which may include local government regulations, owner requirements and lease conditions.3543(Question No. 1166)11663543Faulkner, Sen JohnSenator Faulkner5K4NSWALP00 asked the Minister representing the Minister for Veterans' Affairs, upon notice, on 23 April 1998:(1) What is the value of advertising placed by: (a) the department; and (b) agencies within the Minister's portfolio, on a month-by-month basis since March 1996.(2) What proportion of advertising placed by the department or portfolio agencies since March 1996 has been for: (a) print media; (b) radio; (c) television; or (d) other, and give details of other forms of advertising used.(3) (a) What proportion of advertising placed by the department or portfolio agencies since March 1996 has been placed through the Office of Government Information and Advertising (OGIA); and (b) what mechanism has been used for that advertising not placed through OGIA.3543Newman, Sen JocelynSenator NewmanBE4TASLPSocial Security10—The Minister for Veterans' Affairs has provided the following answer to the honourable senator's question:(1) (a)Month199619971998$$$January16,175.9214,708.98February3,180.307,499.92March17,274.413,898.1010,241.34April16,341.628,653.4714,803.28May5,881.1821,065.84 June22,770.6413,232.01July10,497.3334,114.45August9,927.4116,358.12September14,673.5315,974.88October7,738.4616,053.86November9,558.6513,232.41December7,459.0812,066.31Note: Figures for the Veterans' Review Board, Repatriation Medical Authority and Specialist Medical Review Council are included in the above table.1 (b) Australian War MemorialMonth199619971998$$$January8,304.924,615.82February8,877.259,684.78March4,791.942,116.926,025.95April3,249.801,240.202,114.85May7,377.281,610.84June10,398.605,062.67July1,428.325,108.97August3,912.203,509.66September5,239.044,995.22October7,204.608,156.36November4,943.928,151.17December3,604.926,278.71Department(2) Proportion of advertising placed by medium(a) Print media—99.5%(b) Radio—0.5%(c) Television—Nil(d) Other—Nil.Australian War Memorial:(a) Print media—99.997%(b) Radio—0.003%(c) Television—Nil(d) Other—Nil.Department(a) Nil advertising was placed through OGIA(b) The major portion of advertising is done through TMP Worldwide, with the remainder being placed by the Veterans' Affairs Network (VAN) with local advertisers in rural and remote areas prior to their visits.Australian War Memorial(a) Nil advertising was placed through OGIA(b) Advertisements are either placed directly with a particular publication or, where bulk advertisements are involved, through TMP Worldwide.