Referral of the inquiry
1.1On 23 November 2022, the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 (the bill) was introduced into the House of Representatives by the Assistant Treasurer, the Hon MrStephenJonesMP.
1.2On 24 November 2022, the Senate referred the provisions of the bill to the Economics Legislation Committee (the committee) for inquiry and report by 25January 2023.
1.3On 22 December 2022, the committee tabled a progress report seeking an extension of time to report to 3 March 2023.
Purpose of the bill
1.4Mr Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, outlined the purpose of the bill in his second reading speech:
This bill contains measures designed to maintain and improve Treasury portfolio legislation to ensure it remains current and fit-for-purpose.
This bill reflects the government's commitment to regulatory stewardship through regular maintenance and improvement of portfolio legislation. This program of work is ongoing, and the government intends to pursue regular improvement and maintenance opportunities, where possible, in conjunction with its wider reform agenda.
1.5The bill implements measures that have been developed through Treasury’s Law Improvement Program (LIP)—an ongoing program of work that aims to support the regulatory stewardship of Treasury portfolio laws. The Explanatory Memorandum (EM) explains that improvement measures introduced through the LIP ensure ‘the long-term structural functionality, usability, and quality of Treasury portfolio legislation’.
1.6The committee has previously inquired into other bills which have sought to implement these outcomes. In particular, during the 46th Parliament, the committee carried out an inquiry into the provisions of the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021.
1.7Schedule 1 of that bill sought to extend temporary measures, implemented in response to the Coronavirus pandemic, to facilitate virtual meetings and electronic communication of documents. The committee reported in March 2021 that it considered:
…the extension of regulatory relief to allow companies and registered schemes to use technology to hold meetings, execute documents and send documents relating to meetings has been effective in facilitating the continuation of business during the COVID-19 pandemic. The extension of these measures supports companies and registered schemes to continue using technology to meet regulatory requirements while uncertainty and barriers to 'business-as-usual' caused by the pandemic exist.
1.8The Senate Economics References Committee also carried out an inquiry into the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. In June 2021, that committee reported:
There was widespread support for changes permitting virtual and hybrid meetings, as well those enabling the virtual sending, signing and keeping of documents related to meetings and the execution of company documents. This was in keeping with submissions made to the earlier Legislation Committee inquiry.
Provisions of the bill
1.9The bill has four schedules.
1.10Schedule 1 to the bill, which is made up of four parts, seeks to amend the Corporations Act 2001 (Corporations Act) and other Commonwealth Acts with the aim of modernising communication methods available to consumers, businesses, and regulators.
1.11The measures in Part 1 of Schedule 1 to the bill would expand on the scope of previous technology neutral reforms implemented by the Corporations Amendment (Meetings and Documents) Act 2022. Those reforms, which passed Parliament in February 2022, established a permanent mechanism to allow companies and registered schemes to hold hybrid (in person and remote) meetings, and use technology to execute, sign and share company and meeting related documents.
1.12Part 1 of Schedule 1 would amend the Corporations Act to provide that:
all documents required or permitted to be signed under the Corporations Act can be signed electronically;
documents under specified chapters and schedules of the Corporations Act (see EM for details) can be sent either electronically or in hard copy; and
companies are not required to send documents to a member where the contact details for that member are known to be incorrect.
1.13The inflexibility of current rules for regulators to conduct statutory hearings and examinations was highlighted during the Coronavirus pandemic. The proposed amendments in Part 2 of Schedule 1 to the bill would aim to remove unnecessary barriers to the use of technology at hearings and examinations carried out by regulators under relevant Commonwealth legislation.
1.14Specifically, Part 2 of Schedule 1 to the bill would insert express provisions in various Commonwealth Acts to ensure that regulators could use virtual enquiry technology at hearings and examinations.
1.15It would be at the regulators’ discretion as to whether a hearing or examination is held in a physical, hybrid or virtual form. However, a regulator must ensure that any virtual enquiry technology used is objectively reasonable and that members of the public have a reasonable opportunity to observe the hearing.
1.16Provisions contained within various Treasury laws presently limit flexibility for consumers by restricting methods of payment; for example, by requiring payments be made at a particular place or limiting the use of electronic payments.
1.17Part 3 of Schedule 1 to the bill would make amendments to ensure that digital payments are supported by Treasury legislation.
1.18Currently, numerous Treasury laws require or permit notices to be published in newspapers. To reflect advances in technology and enable effective communication via modern methods of information-sharing, Part 4 of Schedule 1 to the bill would provide flexibility in relevant Treasury legislation regarding the publication requirements for notices.
1.19Part 4 of Schedule 1 to the bill would replace provisions across Treasury laws which require or permit certain notices to be published in newspapers. Under the amendments, these former provisions would be replaced with technology neutral rules, whereby relevant notices are published in a manner such that they are ‘publicly available and reasonably prominent’.
1.20Schedule 2 to the bill seeks to simplify and improve the navigability and readability of Australia’s corporations and financial services laws by enacting recommendations and proposed improvements identified by the Australian Law Reform Commission (ALRC) in its Financial Services Legislation: Interim Report A of the ALRC Review.
1.21The EM explains that the amendments in Schedule 2 would achieve this by removing erroneous and redundant definitions, improving the use of definitions, repealing redundant regulations, and making other minor and technical amendments to the Corporations Act and Australian Securities and Investments Commission Act 2001.
1.22Items 112 and 113 of Schedule 2 to the bill would insert revised requirements for a resolution of a company or the members of a registered scheme (proposed sections 250MA and 253LA respectively) to have effect as a ‘special resolution’ under the Corporations Act. The wording in the bill as introduced to Parliament on 23 November 2022 included that “the resolution must be passed by at least 75 per cent of the votes ‘that may be’ cast by members…”.
1.23On 6 February 2023, the House of Representatives agreed to amendments to omit the words ‘that may be’ from items 112 and 113 of the bill. The amendments correct a drafting error in Schedule 2 to preserve the existing policy settings; that is, to ensure that the threshold for when a special resolution has effect remains as 75 per cent of the votes cast by members.
1.24As articulated in the EM, legislative instruments that notionally amend primary law or regulations create complexity in legislation and undermine accessibility.
1.25Schedule 3 to the bill seeks to amend laws in the Treasury portfolio to move matters presently in legislative instruments of the Australian Securities and Investment Commission (ASIC) into the primary law.A list of the relevant legislative instruments is available in the EM.
1.26Schedule 4 to the bill encompasses numerous measures identified through the ‘miscellaneous and technical amendments’ process in efforts to advance the Australian Government’s ongoing commitment to the care and maintenance of Treasury portfolio legislation.
1.27Schedule 4 to the bill has two parts, separated based on their date of commencement. The EM notes that the amendments in Schedule 4 would ‘correct drafting errors, repeal inoperative provisions, address unintended outcomes and make other technical changes’.
1.28Parts 1, 2 and 3 of Schedule 1 to the bill commence on the day after Royal Assent.
1.29Part 4 of Schedule 1 to the bill commences on a single day to be fixed by Proclamation.If this Part does not commence within the period of six months beginning on the day the bill receives Royal Assent, it commences on the day after the end of that period.
Schedules 2 and 3
1.30Schedules 2 and 3 to the bill commence on the day after Royal Assent.
1.31Part 1 of Schedule 4 to the bill commences on the day after Royal Assent.
1.32Part 2 of Schedule 4 commences on 1 January, 1 April, 1 July or 1October (whichever comes first) after the day the bill receives Royal Assent.
1.33Treasury carried out two rounds of consultations regarding the bill.The first was conducted through a consultation paper during the period of 18December 2020 to 28February 2021, with a total of 24 submissions received.The second was conducted through circulation of an exposure draft of the legislation during the period of 29 August 2022 to 26 September 2022, with a total of seven submissions received.
1.34According to the EM, Schedules 1–3 to the bill have no financial implications.
1.35The amendments in Schedule 4 to the bill are estimated to have a small but unquantifiable impact on receipts over the forward estimates period.
Senate Standing Committee for the Scrutiny of Bills
1.36In its Scrutiny Digest 1 of 2023, the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) raised concerns regarding the retrospective application of item 103 of Schedule 4, Division 21 to the bill.
1.37Item 103 of the bill relates to regulation 51 of the National Consumer Credit Protection Regulations 2010. Regulation 51 provides an exception under the National Credit Code (NCC)—specifically, that the NCC will still apply to fixed charge contracts if the proposed charge exceeds a prescribed maximum amount.
1.38The bill proposes to amend regulation 51 to ensure that the specified charge is only calculated by reference to ‘eligible contracts’, being continuing credit contracts to which the exception already applies, thereby capturing all contracts entered into on or after 13 June 2014. The EM notes that the retrospective application of the proposed amendments in this instance ‘is appropriate because it clarifies the operation of the law and ensures the law aligns with the policy intention, and past industry and administrative practice’.
1.39In outlining its concerns pertaining to Schedule 4, the Scrutiny Committee explained:
Retrospective application challenges a basic principle of the rule of law that laws should only operate prospectively. The committee therefore has long-standing scrutiny concerns in relation to provisions which have the effect of applying retrospectively. These concerns are particularly heightened if the legislation will, or might, have a detrimental effect on individuals.
1.40The Scrutiny Committee also reported that it does not consider that the EM provides adequate justification for the retrospective application of the proposed amendments in item 103 of Schedule 4 to the bill. Additionally, the Scrutiny Committee noted that it is unclear whether the retrospective application in this instance would, or could, have an adverse effect on individuals.
1.41The Scrutiny Committee requested the Treasurer’s more detailed advice as to:
why retrospective validation is sought in relation to the amendments introduced by item 103 of Schedule 4 to the bill; and
whether any persons are likely to be adversely affected by the retrospective application of the provisions, and the extent to which their interests are likely to be affected.
Parliamentary Joint Committee on Human Rights
1.42In its Report 1 of 2023, the Parliamentary Joint Committee on Human Rights (Human Rights Committee) noted that Division 11 of Schedule 4 to the bill proposes to extend the application of certain civil penalty provisions in the Foreign Acquisitions and Takeovers Act 1975 (FATA 1975) to capture exempt core Part 3 actions taken by foreign persons.
1.43The Human Rights Committee suggested that, given the deterrent nature of the civil penalty and the substantial pecuniary sanctions involved (over $687 million for individuals), there is a risk that the relevant penalties may be so severe as to amount to a criminal sanction under international human rights law. Therefore, the changes to civil penalty provisions proposed by Division 11 of Schedule 4 to the bill may engage criminal process rights, including the right to be presumed innocent until proved guilty, and that a case be demonstrated beyond all reasonable doubt.
1.44In its committee view, the Human Rights Committee commented:
…extending the civil penalty provisions in the [FATA 1975] to certain actions taken by foreign persons is an important measure to realise the original policy intention of the penalty provisions and ultimately deter noncompliance…
1.45The Human Rights Committee suggested that ‘consideration should be given to applying a higher standard of proof in the related civil penalty proceedings’ and drew these human rights concerns to the attention of the Assistant Minister and the Parliament.
Human rights implications
1.46The Statement of Compatibility with Human Rights in the EM states that Schedules 1–4 to the bill are compatible with the human rights and freedoms recognised in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
1.47The EM notes that Parts 1, 3 and 4 of Schedule 1 to the bill do not raise any human rights issues as they do not engage any of the applicable rights or freedoms.
1.48Part 2 of Schedule 1 to the bill may engage the certain human rights contained in the International Covenant on Civil and Political Rights (ICCPR); specifically:
the right to a fair hearing; and
the prohibition on interference with privacy.
1.49By seeking to remove barries to the use of technology, the EM explains that Part 2 of Schedule 1 to the bill would promote and protect the right to a fair hearing by ensuring statutory hearings and examinations can be conducted in a manner most appropriate to the circumstances.
1.50Regarding the prohibition on interference with privacy, the EM notes that Part 2 of Schedule 1 to the bill proposes to amend relevant Acts that presently provide for hearings and examinations to be held in private. Measures in the bill do not affect those provisions and, as such, the existing rights pertaining to participants’ privacy are maintained.
1.51The EM concludes that, to the extent that Schedule 1 to the bill engages rights under the ICCPR, it is compatible with the applicable rights and freedoms.
Schedules 2 and 3
1.52The EM notes that Schedules 2 and 3 to the bill do not raise any human rights issues as they do not engage any of the applicable rights or freedoms.
1.53The EM notes that Schedule 4 to the bill engages the following human rights and freedoms:
the right to privacy and reputation;
the right to work; and
the right to justice.
1.54The right to privacy and reputation is engaged by Divisions 5 and 18 under Part 1 of Schedule 4 to the bill; respectively pertaining to ‘Disclosure of protected information’ and ‘Reference Checking and Information Sharing Protocol’. The EM argues that limitations imposed by the proposed amendments on the right to privacy and reputation are reasonable and necessary, and proportionate to the legitimate objective to which they seek to give effect.
1.55The right to work is engaged by Division 12—application provisions relating to financial advisers—under Part 1 of Schedule 4 to the bill. The EM explains that the proposed amendments seek to resolve an ambiguity related to qualification requirements for financial advisers, and thereby positively engage the right to work.
1.56The right to justice is engaged by the proposed amendments in Division 1—foreign ownership register notices—under Part 1 of Schedule 4 to the bill. The EM notes that the amendments widen the scope of relevant penalty provisions in the Foreign Acquisitions and Takeovers Act 1975 by clarifying that certain actions of foreign persons are captured under existing provisions. However, the amendments under Schedule 4 do not increase or impose new penalties or increase penalty amounts.
1.57The EM concludes that Schedule 4 to the bill ‘positively engages the right to work and does not unnecessarily, unreasonably or disproportionately limit the right to privacy and reputation and the right to justice’.
Regulatory Impact Statement
1.58An updated preface to the Regulatory Impact Statement (RIS) is included in the EM as Attachment 1. It provides a summary of amendments made to the Modernising Business Communications measure (Schedule 1 of this bill) based on stakeholder feedback since the release of the initial RIS in June 2021.
1.59There is no RIS in the EM for Schedules 2–4.
Conduct of the inquiry
1.60The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting written submissions by 31January2023.
1.61The committee received nine submissions, which are listed at Appendix 1.
1.62The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions.