Second Reading SpeechMr Pearce (Parliamentary Secretary to the Treasurer)
That this bill be now read a second time.
Today I introduce the Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Bill 2007, which will amend the Corporations Act 2001 to further support initiatives that build closer economic relations between Australia and New Zealand, with the possibility of extending these types of relations to other countries.
The bill also makes important amendments to enable the Australian Competition and Consumer Commission to exchange certain information with domestic and international regulators.
The initiatives embodied in the bill are consistent with the Australia-New Zealand Closer Economic Relations Trade Agreement, which has shaped economic and trade relations between our two countries since 1983. They also further the work program attached to the Memorandum of Understanding on the Coordination of Business Law between Australia and New Zealand.
Importantly, the bill includes four key measures to implement closer economic relations and reduce duplication in regulatory compliance.
Firstly, the bill establishes a mutual recognition regime for the issue of securities and interests in managed investment schemes. This implements the agreement reached in a treaty between Australia and New Zealand on securities offerings.
Currently, if a New Zealand entity seeks to issue securities to investors in Australia and New Zealand, it must comply with two substantive regulatory regimes-the requirements of the home (New Zealand) regime and the Australian Corporations Act, unless an exemption applies.
Because this duplication imposes additional costs on entities, often securities offers are not extended to Australian investors, which reduces investors' choice.
The bill will allow a New Zealand entity to offer securities in Australia and New Zealand, based largely on compliance with New Zealand fundraising laws. Mutual recognition means that Australian entities will be able to offer securities in New Zealand under reciprocal simpler regulatory arrangements.
There is a role for the regulators of both countries in the regime. The Australian Securities and Investments Commission (ASIC) will have primary responsibility for taking action against New Zealand issuers who breach the requirements of the regime, which they have opted into in Australia. Further, the New Zealand regulator will have primary responsibility for supervising a cross-border offer into Australia.
Critically, if a New Zealand entity breaches the requirements of the regulatory regime, ASIC will have the power to stop the offer, prohibit advertisements in Australia and ban the fundraiser from making future offers.
There are also criminal penalties for breaches of the regulatory requirements.
The bill will continue to protect investors by ensuring that they receive the information they need to make informed investment decisions. In this context, the regime will apply to fundraising only, and not to the provision of financial advice.
In the case of breaches of laws relating to fundraising activities, investor remedies will be available in the courts of either jurisdiction.
Overall, the regulatory regime is designed to facilitate investment, enhance competition and of course provide greater investor choice.
The second element of the bill provides for the mutual recognition of companies. The bill will exempt entities from those countries specified in the regulations from being required to lodge particular information or documents with ASIC if that same material is lodged with an equivalent authority in that country.
The bill will not remove the requirement for entities to register with ASIC to operate in Australia. However, this initiative will reduce the administrative burden of registration and ongoing lodging requirements. The bill will thereby reduce duplication in information that is currently lodged with both ASIC and foreign regulators, which in the first instance will be the equivalent New Zealand regulator.
New Zealand recently enacted reciprocal arrangements to give the New Zealand regulator the power to make similar exemptions in relation to Australian companies that operate in New Zealand.
Relevant information will continue to be accessible as both ASIC and the New Zealand regulators are able to share information in this context.
Thirdly, the bill will enhance the Australian Competition and Consumer Commission's (ACCC's) ability to share information with others, including the New Zealand Commerce Commission. The ACCC is currently limited in its ability to share information with others, including its counterpart regulators.
This initiative will place the ACCC in a similar position to that of ASIC with respect to information sharing. Section 127 of the Australian Securities and Investments Commission Act 2001 provides for the appropriate disclosure of information by ASIC to Australian, and foreign, governments and agencies, including regulators. Similarly, this initiative will now enable the ACCC to share information with governments and other agencies, where that information will enable or assist them in performing or exercising their functions or powers.
This initiative will greatly assist the ACCC and other bodies to efficiently and effectively enforce the law. It will also assist in reducing the regulatory burden on business by enhancing cooperation and coordination between these important agencies.
The fourth initiative in the bill will provide for the protection of certain information given, or obtained, by the ACCC, including from a foreign government body. Importantly, the bill will not allow an ACCC official to disclose protected information, except in the performance of their duties or functions or as otherwise permitted by law.
The ACCC information-sharing initiatives implement recommendations made in the 2004 Productivity Commission (PC) Research Report entitled Australian and New Zealand competition and consumer protection regimes. This report recommended that the Trade Practices Act of 1974, and corresponding legislation in New Zealand, should be amended to allow the ACCC and the New Zealand Commerce Commission to exchange information obtained through their information gathering powers. The bill will also implement the recommended safeguards to ensure against the unauthorised use and disclosure of confidential or protected information.
Clearly this bill will foster better and enhanced cooperation between Australia and New Zealand. Its measures are deregulatory in nature, whilst preserving important consumer protections. In this way, the bill can only help facilitate better economic outcomes for the benefit of all Australians.
I commend the bill to the House.
Debate (on motion by Mr Edwards) adjourned.