Division Description Changes — Bills — Treasury Laws Amendment (2021 Measures No. 1) Bill 2021; Second Reading — 9th Aug 2021

Change	Division
senate vote 2021-08-09#7 Edited by mackay staff on 2021-08-27 10:55:30	Title Bills — Treasury Laws Amendment (2021 Measures No. 1) Bill 2021; Second Reading Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 - Second Reading - Against schedule 2 Description ~~<p class="speaker">Nick McKim</p>~~ <p>Before my contribution was so reasonably interrupted, I was reminding my colleagues in the LNP that John Howard made a commitment to Australia being 'the greatest shareholding democracy in the world', and this legislation crabwalks the Liberal Party away from that. It's important that people understand that, under the existing system of continuous disclosure, civil action can be taken either by ASIC or by private litigants where there is a failure to disclose material information, regardless of knowledge, recklessness or negligence. Schedule 2 of this bill relieves directors and CEOs of this burden. Instead, successful civil action will require proving that those running a company knew that they were in receipt of relevant information and that they should have disclosed it to the market. As the Law Council of Australia put it in their submission to the Senate inquiry:</p> <p class="italic">Boards and senior executives will be able to say they were not negligent <i>with respect to</i> the information that should have been disclosed if they did not have it, whether or not they ought to have had it …</p> The majority voted against an [amendment](https://www.openaustralia.org.au/senate/?id=2021-08-09.29.1) introduced by ACT Senator [Katy Gallagher](https://theyvoteforyou.org.au/people/senate/act/katy_gallagher) (Labor), which means it failed. The amendment would have added the text below to the usual [second reading](https://peo.gov.au/understand-our-parliament/how-parliament-works/bills-and-laws/making-a-law-in-the-australian-parliament/) motion that the bill be read a second time (parliamentary jargon for agreeing with the main idea of the bill). ### Motion text > At the end of the motion, add ", but the Senate: > *> (a) notes that the Government's measures in Schedule 2 of the bill would strip shareholders o*f their rights to be adequately informed, damage Australia's corporate governance regime, and allow company directors to get away with failing to disclose important information; and > *> (b) further** notes these measures could damage Australian investment and hurt Australian investors and retirees".* <p>That is the distinction that I am referring to here. While ASIC would still be free, of course, to pursue criminal action against a company for a failure to disclose information, regardless of their state of mind, it would have to clear the much higher criminal hurdle of 'beyond reasonable doubt', rather than the civil hurdle of 'the balance of probabilities'.</p> <p>So schedule 2 of this bill will pave the way for the insider traders to make hay. It will be a boon for private equity and the other large institutional investors who expect to be the first to know. This is going to be 'wink and a nod' stuff. The rich and the powerful will get the good oil. The well-connected will get the winks and the nods. 'Buy or sell ahead of the great unwashed,' they'll say to themselves, and the companies and their bosses who participate in or facilitate this will with a little cunning—and they've got plenty of that—be immune to any repercussions. Schedule 2 seeks to make permanent the changes introduced temporarily last year when the market was shocked by the pandemic. But newsflash for colleagues: that shock is now in the distant past. So now the government—</p> ~~<p class="speaker">Honourable Senator</p>~~ ~~<p>An honourable senator interjecting—</p>~~ ~~<p class="speaker">Nick McKim</p>~~ <p>Absolutely—go and have a look at it. I'll take that injection. Absolutely it is. For the information of colleagues, some of Australia's billionaires doubled their wealth during the first year of the pandemic. When hundreds of thousands of Australians lost their jobs, the billionaires were making off like bandits, as they so often do.</p> <p>So now the government, knowing that the argument for the temporary measures that they introduced last year no longer exists, have turned around and are trying to sell this bill with the argument that it will reduce the prospect of class action litigation being undertaken on behalf of investors. So apparently, according to the government's own argument, having shareholders exercise their rights collectively and hold companies to account is too much of a burden for those poor companies and their poor highly paid executives and directors. What a furphy the government's argument is! As ASIC pointed out recently:</p> ~~<p class="italic">The economic significance of fair and efficient capital markets dwarfs any exposure to class action damages.</p>~~ <p>Well, the Australian Greens could not agree more with ASIC. It's so disappointing to see that the Liberal Party, which was built on a foundation of the exercise of free markets and the importance of information being freely available for the exercise of free markets, does not agree with that comment by ASIC. Class actions and the prospect of them actually support ASIC's enforcement regime, and they help ensure that corporate Australia does the right thing. In turn, this improves investor trust in Australia and the functioning of Australian markets. I cannot believe I am having to educate the Liberal Party on this stuff, but here we all stand today.</p> <p>I note reports that One Nation has once again folded in a screaming heap; it's abandoned the battlers of Australia and ordinary shareholders in companies and is now indicating that it supports schedule 2 of this legislation. Of all the almost innumerable sellouts that we've seen from One Nation in this place, this one is right up there. All of their rhetoric about being here for the battlers and the little guy is now out the window. Here they are, backing the forces of big capital at the expense of mum and dad investors. Senator Roberts likes to bang on about globalists running the world. Well, I'm not going to come at that particular conspiracy, but I can say to Senator Roberts that the forces of global capital will be extremely happy with One Nation voting for schedule 2. All of the big international players, the private equity firms, the index funds, the investment banks, the people who make off like bandits using the hard work of ordinary workers to massively increase their wealth—and are cooking the planet while they're doing it—are cheering on the LNP here and they are cheering on One Nation. Voting for schedule 2 is voting for those people. And for what? What does One Nation get in return? A review after two years. How absolutely cheap and pathetic.</p> <p>In conclusion, this bill demonstrates that neoliberalism is a con and those who advance it are in on the ground floor. The real aim is not fair competition, efficient markets or a shareholder democracy; the real aim is to rig the game so the truly rich and the truly powerful can get even richer and more powerful. The real aim is to further entrench the financialised crony capitalism that now dominates our politics, our economy, our markets and our society.</p> <p>I'd like to end by noting that of course the Greens do support schedule 1 of this bill, on the basis that the measures allowing for the holding of virtual AGMs are temporary. It is prudent in the middle of the pandemic that companies not be required to hold meetings in person for the time being, particularly given the very real prospect of further lockdowns and border closures. However, the Greens are concerned that continued temporary extensions of these measures will encourage the government to attempt to make these measures permanent without due consideration being given to their potential impact. The parliament must be given the opportunity to fully examine the merits of any proposal to permanently allow virtual AGMs. So that deals with schedule 1.</p> <p>But back to schedule 2: the rigging of the game in favour of the very rich and the very powerful—the people who have profited from cooking the planet; the people who have profited from the war on nature; the people who have profited from the introduction of the sixth mass extinction event in the history of our planet. Those are the beneficiaries of schedule 2—those on the inside; those with market power that they ruthlessly exercise at the expense of millions of ordinary Australians who rely on timely and accurate information about their investments and who are being completely dudded by the LNP and One Nation in their support for schedule 2 of this bill.</p> ~~<p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>~~

~~Nick McKim~~
Before my contribution was so reasonably interrupted, I was reminding my colleagues in the LNP that John Howard made a commitment to Australia being 'the greatest shareholding democracy in the world', and this legislation crabwalks the Liberal Party away from that. It's important that people understand that, under the existing system of continuous disclosure, civil action can be taken either by ASIC or by private litigants where there is a failure to disclose material information, regardless of knowledge, recklessness or negligence. Schedule 2 of this bill relieves directors and CEOs of this burden. Instead, successful civil action will require proving that those running a company knew that they were in receipt of relevant information and that they should have disclosed it to the market. As the Law Council of Australia put it in their submission to the Senate inquiry:
Boards and senior executives will be able to say they were not negligent with respect to the information that should have been disclosed if they did not have it, whether or not they ought to have had it …
The majority voted against an [amendment](https://www.openaustralia.org.au/senate/?id=2021-08-09.29.1) introduced by ACT Senator [Katy Gallagher](https://theyvoteforyou.org.au/people/senate/act/katy_gallagher) (Labor), which means it failed. The amendment would have added the text below to the usual [second reading](https://peo.gov.au/understand-our-parliament/how-parliament-works/bills-and-laws/making-a-law-in-the-australian-parliament/) motion *that the bill be read a second time* (parliamentary jargon for agreeing with the main idea of the bill).
### Motion text
> *At the end of the motion, add ", but the Senate:*
>
> *(a) notes that the Government's measures in Schedule 2 of the bill would strip shareholders of their rights to be adequately informed, damage Australia's corporate governance regime, and allow company directors to get away with failing to disclose important information; and*
>
> *(b) further notes these measures could damage Australian investment and hurt Australian investors and retirees".*
That is the distinction that I am referring to here. While ASIC would still be free, of course, to pursue criminal action against a company for a failure to disclose information, regardless of their state of mind, it would have to clear the much higher criminal hurdle of 'beyond reasonable doubt', rather than the civil hurdle of 'the balance of probabilities'.
So schedule 2 of this bill will pave the way for the insider traders to make hay. It will be a boon for private equity and the other large institutional investors who expect to be the first to know. This is going to be 'wink and a nod' stuff. The rich and the powerful will get the good oil. The well-connected will get the winks and the nods. 'Buy or sell ahead of the great unwashed,' they'll say to themselves, and the companies and their bosses who participate in or facilitate this will with a little cunning—and they've got plenty of that—be immune to any repercussions. Schedule 2 seeks to make permanent the changes introduced temporarily last year when the market was shocked by the pandemic. But newsflash for colleagues: that shock is now in the distant past. So now the government—
~~Honourable Senator~~
~~An honourable senator interjecting—~~
~~Nick McKim~~
Absolutely—go and have a look at it. I'll take that injection. Absolutely it is. For the information of colleagues, some of Australia's billionaires doubled their wealth during the first year of the pandemic. When hundreds of thousands of Australians lost their jobs, the billionaires were making off like bandits, as they so often do.
So now the government, knowing that the argument for the temporary measures that they introduced last year no longer exists, have turned around and are trying to sell this bill with the argument that it will reduce the prospect of class action litigation being undertaken on behalf of investors. So apparently, according to the government's own argument, having shareholders exercise their rights collectively and hold companies to account is too much of a burden for those poor companies and their poor highly paid executives and directors. What a furphy the government's argument is! As ASIC pointed out recently:
~~The economic significance of fair and efficient capital markets dwarfs any exposure to class action damages.~~
Well, the Australian Greens could not agree more with ASIC. It's so disappointing to see that the Liberal Party, which was built on a foundation of the exercise of free markets and the importance of information being freely available for the exercise of free markets, does not agree with that comment by ASIC. Class actions and the prospect of them actually support ASIC's enforcement regime, and they help ensure that corporate Australia does the right thing. In turn, this improves investor trust in Australia and the functioning of Australian markets. I cannot believe I am having to educate the Liberal Party on this stuff, but here we all stand today.
I note reports that One Nation has once again folded in a screaming heap; it's abandoned the battlers of Australia and ordinary shareholders in companies and is now indicating that it supports schedule 2 of this legislation. Of all the almost innumerable sellouts that we've seen from One Nation in this place, this one is right up there. All of their rhetoric about being here for the battlers and the little guy is now out the window. Here they are, backing the forces of big capital at the expense of mum and dad investors. Senator Roberts likes to bang on about globalists running the world. Well, I'm not going to come at that particular conspiracy, but I can say to Senator Roberts that the forces of global capital will be extremely happy with One Nation voting for schedule 2. All of the big international players, the private equity firms, the index funds, the investment banks, the people who make off like bandits using the hard work of ordinary workers to massively increase their wealth—and are cooking the planet while they're doing it—are cheering on the LNP here and they are cheering on One Nation. Voting for schedule 2 is voting for those people. And for what? What does One Nation get in return? A review after two years. How absolutely cheap and pathetic.
In conclusion, this bill demonstrates that neoliberalism is a con and those who advance it are in on the ground floor. The real aim is not fair competition, efficient markets or a shareholder democracy; the real aim is to rig the game so the truly rich and the truly powerful can get even richer and more powerful. The real aim is to further entrench the financialised crony capitalism that now dominates our politics, our economy, our markets and our society.
I'd like to end by noting that of course the Greens do support schedule 1 of this bill, on the basis that the measures allowing for the holding of virtual AGMs are temporary. It is prudent in the middle of the pandemic that companies not be required to hold meetings in person for the time being, particularly given the very real prospect of further lockdowns and border closures. However, the Greens are concerned that continued temporary extensions of these measures will encourage the government to attempt to make these measures permanent without due consideration being given to their potential impact. The parliament must be given the opportunity to fully examine the merits of any proposal to permanently allow virtual AGMs. So that deals with schedule 1.
But back to schedule 2: the rigging of the game in favour of the very rich and the very powerful—the people who have profited from cooking the planet; the people who have profited from the war on nature; the people who have profited from the introduction of the sixth mass extinction event in the history of our planet. Those are the beneficiaries of schedule 2—those on the inside; those with market power that they ruthlessly exercise at the expense of millions of ordinary Australians who rely on timely and accurate information about their investments and who are being completely dudded by the LNP and One Nation in their support for schedule 2 of this bill.
~~Long debate text truncated.~~