Explanatory Memorandum
(Circulated by authority of the Minister for Finance, Senator the Hon Mathias Cormann)NOTES ON SCHEDULE 7 - Australian Securities and Investments Commission Act 2001
Introduction
73. Schedule 7 to the Bill repeals Part 9 of the Australian Securities and Investments Commission Act 2001 (ASIC Act), which provides for the establishment, functions and operation of the Corporations and Markets Advisory Committee (CAMAC). The proposed amendments to the ASIC Act would abolish CAMAC.
74. Schedule 7 of the Bill further makes a number of consequential amendments to the ASIC Act as a result of the repeal of Part 9 and provides for the transitional and savings arrangements that are necessary to reflect the cessation of the agency.
75. Cessation of CAMAC was announced in the 2014-15 Budget and was expected to have a positive impact on the fiscal balance of $2.8 million, and on underlying cash of $3.1 million over the forward estimates. These estimates made allowances for the costs of shutting down CAMAC, such as employee redundancies and contract termination costs. The cessation of CAMAC has no regulatory impact on business or the community more broadly.
76. CAMAC was established in 1989 as part of a legislative package that set up a national scheme for corporations and financial markets. CAMAC provides independent advice to the Australian Government on matters relating to the amendment, administration or reform of the corporations legislation, matters relating to companies or a segment of the financial products and services industry, and proposals to improve the efficiency of financial markets.
77. CAMAC is a statutory body corporate, comprising part-time members appointed by a Treasury Portfolio Minister under section 147 of the ASIC Act. Members are appointed in a personal capacity on the basis of their knowledge and experience in business, financial markets, law, economics or accounting. CAMAC is supported by a full-time Executive of three staff.
78. The decision to cease CAMAC was made in the context of the broader Smaller and More Rational Government reforms to reduce the number of Australian Government bodies and streamline the shape of government. The abolition and merger of some government bodies, including CAMAC, was expected to improve coordination and accountability, reduce the costs associated with separate governance arrangements and increase efficiency in how public funds are used to deliver services to the community.
79. Schedule 7 to the Bill does not provide for the termination of the employment of CAMAC's Secretariat staff, as these are matters that are handled by administrative processes conducted in accordance with the Public Service Act 1999 and relevant private contracts.
80. The amendments in Schedule 7 to the Bill were originally introduced into Parliament in 2014 as a separate bill with the title Australian Securities and Investments Commission Amendment (Corporations and Markets Advisory Committee Abolition) Bill 2014. This bill had not passed the Senate when the last general election was called and therefore lapsed when Parliament was prorogued in April 2016.
Explanation of the provisions
81. Part 1 makes numerous consequential amendments, repeals and omissions to the ASIC Act to reflect the cessation of CAMAC. References to CAMAC or terms related to CAMAC in the ASIC Act are repealed or omitted as follows.
82. Item 1 provides that a reference to CAMAC is omitted from the long title of the ASIC Act, which sets out that the ASIC Act provides for the Australian Securities and Investments Commission (ASIC), CAMAC and certain other bodies, and for other purposes.
83. Item 2 provides that the objects of the ASIC Act include establishing CAMAC. This description is repealed.
84. Items 3 to 8. Definitions of 'CAMAC', 'Convenor', 'meeting' and 'member' are amended or repealed, as appropriate.
85. Item 9 provides that notwithstanding the repeal of Part 9 of the ASIC Act, ASIC retains its power to advise and make recommendations to the relevant Treasury Portfolio Minister (the Minister), on its own initiative or when requested by the Minister, about matters relating to:
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- proposals, amendment or reform of the corporations legislation;
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- the operation or administration of the corporations legislation;
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- companies or a segment of the financial products and financial services industry; and
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- proposals to improve the efficiency of the financial markets.
86. These are matters on which both CAMAC and ASIC currently have the power to advise and make recommendations to the Minister. The functions of CAMAC will therefore not be transferred to ASIC or any other Commonwealth entity.
87. Item 10 provides that CAMAC is omitted from the list of agencies to which a person who is authorised by the Chairperson of ASIC may disclose particular information in certain circumstances. Item 10 omits the reference to CAMAC in subsection 127(4) of the ASIC Act.
88. Item 11 abolishes CAMAC by repealing the provisions of the ASIC Act (that is, Part 9) which establish it and provide for its functions and operation.
89. Item 12 provides that the broad provision in the ASIC Act listing entities and persons who are exempt from liability for damages in relation to the performance of their functions and powers is amended to omit references to CAMAC, its members and its staff, consultants and secondees.
90. Item 13. Section 261 of the ASIC Act provides that a body that was established under the Australian Securities and Investments Commission Act 1989 (the 'old ASIC Act') continues in existence as if it had been established under this Act. A note is added to identify that CAMAC ceased to exist on the commencement of Schedule 7 to this Bill.
Part 2
91. Subitem 14(1). Transitional and saving provisions are required to deal with the repeal of Part 9 of the ASIC Act or to preserve aspects of that Part. Many of these provisions are standard provisions that apply whenever an agency is abolished. References in this Bill and explanatory memorandum to Treasury Minister, Treasury Department and Treasury Secretary are references to the relevant Treasury Portfolio Minister (currently the Minister for Revenue and Financial Services), the Department of the Treasury (the Treasury), and the Secretary of the Department of the Treasury, respectively. 'Asset' and 'liability' are defined broadly to ensure that all assets and liabilities, whether actual, contingent or prospective, of CAMAC are covered. Asset means any legal or equitable estate or interest in real or personal property and any right, power, privilege or immunity. Liability means any liability, duty or obligation. (Land is defined as any legal or equitable estate or interest in real property, whether actual, contingent or prospective.)
92. Subitem 14(2). In terms of the version of the Acts Interpretation Act 1901 that applies to this Bill, the Bill specifies that section 5A of the ASIC Act applies to Part 2 in Schedule 7 to this Bill (the transitional and saving provisions) as if that Part were part of the ASIC Act. Section 5A of the ASIC Act applies the Acts Interpretation Act 1901 as in force on 1 January 2005 (rather than the current version from time to time) to the ASIC Act. Because Part 1 of Schedule 7 to this Bill only amends the ASIC Act, also applying section 5A to Part 2 of Schedule 7 to this Bill makes the operation of the Acts Interpretation Act 1901 consistent.
93. Item 15. When the operation of CAMAC ceases, CAMAC's assets and liabilities cease to be assets and liabilities of CAMAC and become assets and liabilities of the Commonwealth. They do so automatically without the need for any conveyance, transfer or assignment. 'Asset' and 'liability' are defined broadly to ensure that all assets and liabilities, whether actual, contingent or prospective, of CAMAC are covered. Asset means any legal or equitable estate or interest in real or personal property and any right, power, privilege or immunity. Liability means any liability, duty or obligation.
94. While it is not expected that these provisions about the treatment of assets and liabilities will be used, the provisions provide a safety net in the event that CAMAC still has assets or outstanding liabilities upon cessation.
95. Subitems 16(1) and (2) provides a process for the registration of the vesting of land and other assets, for use in the event that any land or other asset becomes vested in the Commonwealth under Part 2 of Schedule 7 to the Bill.
96. Subitem 16(3) provides that unless the contrary is established, a document that appears to be a certificate made under item 16 is taken to be such a certificate and to have been properly made.
97. Subitem 16(4) states that a certificate made under item 16 of Schedule 1 is not a 'legislative instrument' within the meaning of section 5 of the Legislation Act 2003. This provision is merely declaratory of the law and is included to assist readers. The provision in no way purports to exempt the item from the requirements of the Legislation Act 2003.
98. Subitems 17(1) and (2) provides that once CAMAC's operation ceases, references to CAMAC in instruments that were already in force at that time are to be read as references to the Commonwealth. This preserves the operation of instruments despite the cessation of CAMAC. It does not prevent the instrument from being terminated or varied after the cessation.
99. Instrument is defined as including a contract, undertaking, deed, agreement, notice, authority, order or instruction. It also includes an instrument made under an Act or under regulations but does not include an Act or an instrument made under this Bill. The Corporations Agreement 2002 is also excluded from the definition of 'instrument' to avoid the unworkable outcome that would result from references to CAMAC in that Agreement being read as references to the Commonwealth.
100. Subitem 17(3) provides that in order to ensure that the substitution does not create an inappropriate outcome, the Treasury Minister may make rules specifying particular instruments or references in instruments are not treated in accordance with subitem 17(1) of Schedule 7, meaning that a reference or references to CAMAC in an instrument are retained.
101. Subitem 17(4) provides that the rules must be registered in accordance with the Legislation Act 2003. Despite subsection 12(2) of the Legislation Act 2003 (which provides for when legislative instruments may take effect) rules made by the Treasury Minister pertaining to references in instruments may take effect from a day before the rules are registered. They may not, however, take effect before the cessation of CAMAC.
102. Subitem 18(1) provides that except in the case of the operation of the Ombudsman Act 1976 once CAMAC's operation ceases, anything done by or in relation to CAMAC before it is abolished will be treated as if it had been done by, or in relation to, the Commonwealth.
103. Subitem 18(2) provides that for the purpose of the operation of the Ombudsman Act 1976 after the cessation of CAMAC, action taken by or in relation to CAMAC prior to the cessation is taken to have been done by or in relation to the Treasury.
104. As the Commonwealth Ombudsman (the Ombudsman) is not empowered to investigate complaints about the Commonwealth, this provision substitutes the Department (being Treasury) rather than the Commonwealth for CAMAC.
105. If, at the commencement time, a complaint had been made to the Ombudsman about action taken by or in relation to CAMAC, or the Ombudsman had commenced an investigation into action taken by or in relation to CAMAC, then the Ombudsman Act 1976 applies after CAMAC ceases as if the relevant action had been taken by or in relation to the Treasury. This item also allows new complaints to be made and dealt with after CAMAC's operation ceases, again substituting 'the Treasury Department' for 'CAMAC'.
106. Subitem 18(3) provides that in order to ensure that the substitution in subitem 18(1) does not create an inappropriate outcome, the Treasury Minister may make rules specifying:
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- particular things which are not treated in accordance with subitem 18(1) of Schedule 7 meaning that things done by or in relation to CAMAC before its cessation will continue to be treated as having been done by or in relation to CAMAC, despite its cessation; or
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- particular things which are treated in accordance with subitem 18(1), but instead of substituting the Commonwealth for CAMAC, a person identified in the rules is substituted for CAMAC.
107. Allowing the Treasury Minister to make exceptions in rules provides flexibility to avoid a situation where treating a thing as having been done by the Commonwealth would create an absurd, unworkable or unintended outcome.
108. Subitem 18(4) provides that similar to rules relating to references in instruments, despite subsection 12(2) of the Legislation Act 2003, rules made by the Treasury Minister pertaining to things done by or in relation to CAMAC may take effect before the rules are registered. However, they may not take effect before the cessation of CAMAC.
109. Item 19 provides that once CAMAC ceases, the Commonwealth is substituted for CAMAC as a party to any proceedings that were pending in any court or tribunal and to which CAMAC was a party. This provision ensures that any existing litigation is not affected by the cessation of CAMAC.
110. Item 20. Any records or documents that were in CAMAC's possession need to be transferred to the Treasury once CAMAC's operations are ceased. The records and documents are Commonwealth records for the purposes of the Archives Act 1983, which means that there are particular rules governing their transfer, storage and disposal.
111. Item 21 also preserves the protection of information already disclosed by ASIC to CAMAC under subsection 127(4) of the ASIC Act. If ASIC imposed conditions on a person (for example, a member of CAMAC's Secretariat) under subsection 127(4A) of the ASIC Act in relation to the protected information, then those conditions continue to apply to the person after the commencement time.
112. Under subsection 127(4) of the ASIC Act, disclosure of information by ASIC to CAMAC is taken to be authorised use and disclosure of the information if the Chairperson of ASIC is satisfied that the information will enable or assist CAMAC to perform or exercise its functions or powers. Under subsection 127(4A), the Chairperson of ASIC may impose conditions in relation to the disclosed information.
113. Subitem 22(1). Currently, the Convenor of CAMAC is required to prepare an annual report under section 162 of the ASIC Act. Once the operation of CAMAC ceases, the Treasury Secretary must prepare and give to the Treasury Minister a report on the activities of CAMAC during the final reporting period.
114. Subitem 22(2) provides that the Minister for Finance (being the Minister administering the Public Governance, Performance and Accountability Act 2013) may give the Treasury Secretary written directions in relation to the report on CAMAC's activities during the final reporting period. The Treasury Secretary is required to comply with any such directions in preparing the report.
115. Subitem 22(3) provides that the Treasury Secretary must give the Treasury Minister the report within four months of the commencement time.
116. Subitem 22(4) provides that after the report is given to the Treasury Minister, the Treasury Minister is required to table the report in both the House of Representatives and the Senate within 15 sitting days of that House.
117. Subitem 22(5). The definition of 'final reporting period' clarifies that it refers to the time starting on the day after the end of the period covered by the last annual report prepared by CAMAC and ending immediately before the commencement time (see next paragraph for the definition of commencement time). Under Part 9 of the ASIC Act the Convenor of CAMAC is required to prepare and give to the Minister as soon as practicable after 30 June in each year a report on CAMAC's operations during the financial year.
118. Item 23 provides that no stamp duty or other tax is payable under the law of a State or Territory in respect of the vesting of an asset or a liability under Part 2 of Schedule 7 or the operation of the Part in any other respect.
119. Subitem 24(1) provides that the Treasury Minister may delegate all or any of his or her powers and functions under Part 2 of Schedule 7 to this Bill, with the exception of the power to make transitional and other rules to either the Treasury Secretary or a member of the Senior Executive Service (SES) (or acting member of the SES) of the Treasury. ('SES employee' and 'acting SES employee' are defined in the Acts Interpretation Act 1901.) The delegation must be made in writing.
120. Subitem 24(2) provides that the Minister for Finance may delegate the power in subitem 22(2) to give directions to the Secretary to the Treasury in relation to the final report.
121. Subitem 24(3) provides that the Minister for Finance may delegate this power to the Secretary to the Department of Finance. In exercising powers or functions under a delegation, the delegate must comply with any directions of the delegating Minister.
122. Item 25 provides a savings provision even though item 12 in Part 1 of Schedule 7 removes references relating to CAMAC from the list of entities and persons in subsection 246(1) of the ASIC Act who are exempt from liability for damages in relation to the performance of their functions and powers in certain circumstances, this Bill provides a saving provision.
123. Subitem 25(1) thus provides that despite the repeal of the references to CAMAC, its members and its staff, consultants and secondees in section 246 of the ASIC Act (specifically, paragraphs 246(1)(b), (d) and (h)), those persons continue to be exempt from liability for damages in relation to an act done or omitted in good faith in the performance or purported performance of any function or power conferred under the corporations legislation before the commencement time. The exemption from liability applies in relation to those acts or omissions as if the repeal (in item 12) had not happened.
124. Subitem 25(2) provides that in the case of the reference to CAMAC in paragraph 246(1)(b) of the ASIC Act, the exemption from liability continues in relation to acts or omissions by CAMAC before the commencement time as if the Commonwealth were referred to in that paragraph. This substitutes 'the Commonwealth' for 'CAMAC'.
125. Item 26 provides that to the extent that the operation of Part 2 of Schedule 7 results in the acquisition of property from a person on other than just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person. If the Commonwealth and the person cannot agree on the amount of any such compensation to be paid, the person may institute proceedings against the Commonwealth and the court may determine a reasonable amount of compensation.
126. Item 27 provides that the Treasury Minister may make rules specifying matters which are required or permitted by Schedule 7 to be prescribed in rules; or in relation to transitional matters that may arise out of the amendments and repeals made by Schedule 7 (see item 17 above).
127. This standard rule-making power provides flexibility to ensure that the cessation of CAMAC occurs in an orderly and straightforward manner, and that unforeseen matters that may arise can be dealt with appropriately, without confusion, in accordance with the effect of this Bill. It is not designed to override or otherwise alter the effect of this Bill. Particular instruments or references in instruments are treated in accordance with subitem 17(1), but instead of substituting the Commonwealth for CAMAC, a person identified in the rules is substituted for CAMAC.
128. Such rules are legislative instruments governed by the Legislation Act 2003. The rules would be disallowable by either House of the Parliament under section 42 of the Legislation Act 2003.