I am sure that you are already aware of the uncertainty and confusion which surrounds the status of Australia’s Corporations Law following recent decisions of the High Court, culminating in the decision in The Queen v Hughes. Nevertheless, I am writing to the federal Minister for Financial Services and Regulation, Mr Joe Hockey, and to each of the state premiers to stress the importance that the business community places on the early resolution of this issue.
The business community is concerned not only that the current uncertainty is already having a significant impact on business activity in Australia, but that there is a real possibility that a further adverse High Court ruling could cause chaos for many Australian corporations. The uncertainty, and the failure to resolve the situation quickly, will also seriously undermine Australia’s international business and financial reputation.
Failure to resolve the current uncertainty and confusion could significantly compromise the administration of large areas of business law, including such fundamental areas as the operation or formation of companies. For example, past actions of the Australian Securities and Investments Commission relating to company registrations and the granting of exemptions or modifications could be declared invalid, meaning companies face considerable risk and potential expense. It is also inevitable that some individuals will seek to take improper advantage of the resulting confusion.
A number of responses to this situation have been proposed, but of these the referral of powers to the Commonwealth provides the most realistic, and arguably only, immediate answer. A referral of powers would provide relative certainty in the administration of the national Corporations Law scheme. Through mechanisms such as the intergovernmental agreement on corporations and securities regulation and the ability of states to retract the referral, it would also provide the greatest assurance to the states that the Commonwealth will not use the referred powers inappropriately.
Alternatives to the referral of power do not provide realistic solutions to the uncertainty and confusion that currently exists. A Constitutional amendment may ultimately be necessary to finally resolve these issues, but an amendment is an impractical solution in the short term. Proposals to return to a state-based regulatory regime merely raise all the concerns with ineffectiveness and inconsistency that saw the states and Commonwealth agree on the national scheme.
We do not advocate the referral of power lightly, nor do we underestimate the complexity of the task. It is imperative, however, for businesses to operate effectively in Australia, and for our international reputation, that the current uncertainty be addressed as soon as possible.