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Chapter 5 - Conclusions and recommendations
Conclusions
5.1
The Committee accepts the main points made in
the submissions by the Attorney-General's Department and the Treasury and by
the Coalition for Corporate Certainty. In light of these submissions the Committee
concludes that the present system of what is effectively a uniform national
scheme of corporate regulation has been fundamentally compromised by the recent
High Court decisions in Wakim and Hughes, resulting in
uncertainty and confusion. As a consequence, business and investor confidence
has been adversely affected, with the potential for considerable damage to the
financial system and the economy.
5.2
In particular, the Committee accepts that this
uncertainty is already causing problems for Australia's international financial
and legal reputation. The Committee is deeply disturbed at the implications of
these developments.
5.3
The Committee therefore concludes that urgent
action is necessary to remedy the situation. In this context the Committee
concludes that referral of certain State powers to the Commonwealth Parliament,
as reflected in the NSW Act and the two Commonwealth Bills which are the
subject of this Report, is the most practical and immediate option available.
The Committee concludes that the package of arrangements of which this
legislation is the core element will provide a national uniform scheme of
corporate regulation which is constitutionally valid, thereby overcoming, as
far as it is possible to do so, the difficulties caused by the High Court cases.
5.4
The Committee notes that the package of
arrangements include a number of measures, some of which are in the legislation
and others in the Corporations Agreement, intended to meet State concerns about
possible ways in which the Commonwealth could exercise the referred powers. The
Committee concludes that these are acceptable in the circumstances and should
not be a reason to delay passage of the two Commonwealth Bills. In this context
the Committee notes that the two Bills do not make any substantial policy
changes to the Acts which they replace.
5.5
The Committee also notes that the package of
arrangements will see an increase in the voting and consultation rights of the
States, and that the referral of powers by the States is only for 5 years,
unless extended by the States.
5.6
The Committee notes advice that a constitutional
amendment would be the most effective and permanent way to deal with the
problem. The Committee concludes, however, that while this may be theoretically
the case, in practice it is not really an option in the short term when, as
noted above, urgent action is needed. The Committee therefore considers that
the general package of measures to effect the referral of powers option should
be implemented as soon as possible, following which the Commonwealth could, if
it wished, proceed with its stated intention to consider a constitutional
amendment by way of referendum.
5.7
The Committee notes that the Corporations
(Commonwealth Powers) Act 2001 (NSW) is the first State Act to refer powers
to the Commonwealth under the terms of agreed arrangements between the
Commonwealth and a State. The Committee believes that this was a most positive
development and urges the other States to pass similar legislation as soon as
practicable.
5.8
Finally, the Committee notes that the package of
arrangements does not remedy all of the consequences arising from the decisions
in Re Wakim and The Queen v Hughes for other national cooperative
schemes. The Committee considers that the Commonwealth should examine these
schemes and act to resolve the uncertainty surrounding the schemes.
Recommendations
5.9
The Committee recommends that the Corporations
Bill 2001 and the Australian Securities and Investments Commission Bill 2001 be
passed without amendment as early as possible, with the intention of meeting
the 1 July 2001 target for commencement of the new scheme.
Senator Grant Chapman
Chairman
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