by Adam Bandt –
This Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 is the latest example of the government using COVID as a cover to wind back protections for individuals to instead give even more power to the big corporations and the superwealthy that run this government. They’re trying it on with the repeal of the responsible lending obligations, which is going to once more give banks a licence to engage in predatory lending-even after the royal commission said, in recommendation No. 1, to keep those rules in place to protect consumers. They’re trying it on with their industrial relations bill, which is going to further entrench insecure work and keep wages low, and they’re trying it on with this bill, which will water down the requirement of companies to make continuous disclosures to the market and shareholders of information that is material to how much a company is worth or a company’s valuation.
Apparently, the economic recovery after COVID is advanced enough to take away extra income support for jobseekers at a time when there are two million either without work or without enough hours of work. All the people on JobSeeker will be plunged below the poverty line, because apparently we’re out of the woods-lollies and lemonade are falling from the sky and everything is okay-so we can cut JobSeeker back to below the poverty line and take away wage subsidies.
This will hit hard, especially in my area of Melbourne. A lot of the businesses that have been hit hardest by COVID are still being hit because they’re businesses in events and hospitality and the creative sector. They rely on getting lots of people together in the same place. They just can’t do it, because of social distancing restrictions, because we are still dealing with a pandemic. Apparently it’s okay for those businesses to get cut and to fall off the JobKeeper cliff, and apparently it’s okay for people who are unemployed in a pandemic and looking for work to have their support payment cut to below the poverty line.
According to the government the economic recovery is well advanced, so we don’t need those supports anymore. At the same time, they say the economic recovery is in so much trouble that we need to rig the rules even further-to benefit the rich and powerful-so that the people who run companies don’t have to tell the rest of the world what’s going on. It’s one rule for the big corporations and billionaires, where they get more and more special treatment, and another for everyone else, where they’re asked to live on wages below the poverty line and be with two million people either without a job or without enough hours of work.
The pandemic is being used as a poor excuse to pursue a neoliberal trickle-down agenda, which has nothing to do with building a better recovery and everything to do with this government helping out their mates, the people who make donations to them. That is why they are doing this. The big corporations have said, ‘We want the opportunity to tell people less about what goes on behind closed doors, so would you please do it for us and why not use COVID as an excuse.’ The government has said, ‘Yep, we’ll tell everyone that the economy is going so well that we don’t have to pay JobSeeker above the poverty line and we can cut JobKeeper. Then we’ll tell them, in the same breath, that the economy is doing so poorly that the rich and powerful deserve more special treatment.’
The thing is, if you take the government and their rhetoric at face value-they come in here saying that they believe in the markets, that they believe in open and transparent markets and the market will solve everything. We know that’s not true. We know that, left unchecked by parliament, the markets can create massive inequalities. We have seen, for example, billionaires’ wealth in Australia rise by around 50 per cent-it depends on the estimate; it’s at least 25 per cent-and up to 70 per cent during the pandemic while everyone else is doing it tough. We know that markets can lead to inequality when left unchecked, but if you accept the government at face value they say they’re the party of markets.
But markets are meant to work on the basis of equal access to information. That’s why there are rules against things like insider trading. The basic rule is, if you’re in a corporation and you’ve got access to information that’s going to affect the price of your shares, the people who own the company have to release it. We have these rules set out that require companies to make what are called continuous disclosures and help create a level playing field, so the theory goes. This, in turn, so the theory goes, taking the government at face value, helps ensure the integrity of Australia’s share market and benefits investors and business alike.
This bill goes in the opposite direction and says it’s okay to keep things secret. It might help the big corporations but it won’t help ordinary shareholders. The government is now saying, ‘That’s okay.’ As Ben Hardwick from Slater and Gordon put it:
If you truly believe in markets then you’ll consider transparency and accountability to be good things, because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences then you’ll take a different view
This government is all for crony capitalism-that is, they just do what the corporations and the billionaires ask them to. Even when it violates every principle in their so-called professed ideology, they don’t care, because they want to keep getting donations from the billionaires and keep the revolving door going between the big corporations and seats in parliament. In return they will do whatever is asked. The government are nothing more than big corporate shills.
Under the existing continuous disclosure framework, civil action can be taken. So, if you’re ASIC or a private litigant, where there’s a failure to disclose material information regardless of knowledge, recklessness or negligence, you can go to court. That puts the obligation on directors to find out what is going on and tell people what they need to know if it’s going to affect the value of their shares. But now schedule 2 of this bill relieves the directors and CEOs of this supposed burden. Instead, civil action to succeed is going to require proving that those running a company knew they were in receipt of relevant information and that they should have disclosed it-effectively, it reverses the onus of proof. If you’re sitting there in a corporation and you know something that might affect the value of the shares, at the moment you’re obliged to release it to the market. This is going to reverse it so that the shareholders have to have telepathy and know what they don’t know. The shareholders have to know that the corporate directors know something and then take them to court and prove it. It reverses the onus of proof, and it completely and fundamentally changes the way the system operates. It will now be okay to sit on information that might affect people’s share investments just because you as a director of a company are sitting there and you think it might be in your or the company’s interests.
This is going to pave the way for insider trading. For everyone who felt they could make rational investments in particular companies, this ends that. It privileges those in the know. It privileges the rich and powerful, because now they can know something about their company, know that the company is about to tank or rise, and then do whatever they want with their shares-make a squillion out of it. Everyone else will be left to pick up the pieces, and there’s nothing they can do about it because the government reversed the onus of proof. That’s what this bill is about-benefiting the people who run the big corporations because they’re the people who donate to the Liberal Party. The millions of people who rely on what they think is the fair and efficient function of Australia’s stock market are going to lose out.
The government’s also selling this bill with the argument that it’ll somehow reduce the prospect of class action litigation being undertaken on behalf of investors. Apparently, according to this government, shareholders exercising their rights collectively and holding companies to account is too much of a burden for companies and their highly paid executives and directors. What a furphy. The point of class actions is to enable ordinary people who aren’t in a position to commence litigation against a big executive, corporate director or corporation to have access to justice. Not many people have access to the money to do that themselves. Class actions, when there have been a lot of people who have been affected, allow people to join together, have strength in numbers and say, ‘We’ll take the big corporation on.’ That is a principle which should be defended. The government obviously doesn’t like that principle, but the government says that there are too many of these kinds of class actions against directors, so it’s got to change the law to give these corporate directors the kind of protection that I’ve just outlined-the ability to do what is illegal. By ASIC’s count, there’s been an average of just five class actions a year for the last 20 years, but, even so, as ASIC-ASIC!-points out, the economic significance of fair and efficient capital markets dwarfs any exposure to class action damages. Class actions and the prospect of them support the enforcement regime of ASIC-the regulator-and help them ensure that corporate Australia does the right thing.
But this government is all about allowing big corporations and directors to do the wrong thing. There are things that a director or corporation might do for which at the moment you could take them to court and say, ‘You’ve ripped me off,’ or ‘You’ve engaged in insider training.’ Under this bill, you’re not going to be able to do that, because the onus of proof is going to be reversed. You’re going to have to prove what was inside the head of the corporate director. If you can get past the walls of lawyers and through the walls of their mansions and through the security guards, maybe you’ve got a chance of doing that, but that’s not what most people are going to be able to do. Most people are going to lose.
The Greens will not be supporting schedule 2 of the bill. Its only purpose is to benefit those on the inside and those with market power. It is going to come at the expense of millions of everyday Australians. That’s what this government is about. The government acts for big corporations and billionaires, and everyone else is left to pay the price. The Greens will hold this government to account and will not support this move that would pave the way for insider trading and the rip-off of everyday people in this country.