The Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007 was welcomed by Parliamentary Secretary to the Treasurer, Chris Pearce, who said that Australia’s corporate and financial services regulatory framework will be simpler and more efficient.

“This will enable many of the benefits that will flow from a reduction in the regulatory burden to be available from 1 July 2007, in particular the improve facility for distribution of the 2006—07 annual reports over the internet and electronic registration of charges,” Pearce said.

But the passing of the Bill was not without its tribulations. While it planned to support the passage of the government’s latest corporations reform Bill last week, Labor openly rejected the “rushed, ad hoc nature” of the amendments.

Before it was passed, the government and Federal Opposition entered into a parliamentary stoush over whether the Bill has appropriately addressed industry concerns and achieved what it set out to do.

According to Labor MP Anna Burke, while the package of amendments’ primary aim was to simplify and facilitate access to affordable financial advice for consumers, the Bill does not properly achieve this. She said that the “piecemeal approach to it is causing greater confusion for consumers and their advisers”.

While she acknowledged that the general measures of the Bill represent some progress towards simplification of some elements of “our complex financial regulatory system”, she said it was far from a comprehensive set of solutions.

“It is disturbing that after three years of financial services reform, FSR [Financial Services Reform] disclosure documentation is still lengthy, complex and unreadable, often of some 50—100 pages. The purpose of FSR was to give people documentation they could understand … With 50—100 pages most people give up in frustration and take the first set of advice, which is not always the best advice they could be getting,” Burke said.

But Burke said she recommends Labor support the passage of the Bill, even though “there is a lot of work still to be done”. She added that “it should have been done in a more timely and professional manner”.

The government rejected Burke’s claims, and Senator Grant Chapman said in the Senate last week that he was “somewhat bewildered and bemused” by the minority report by opposition members of the Parliamentary Joint Committee on Corporations and Financial Services to the report being tabled.

He said that on one hand the opposition members agree with the recommendations of the committee, and on the other hand they complain about it.

“Had Labor had any convictions of sound and strong policy making, the opposition members of the committee would have come up with strategies to address their concerns,” Chapman said.

“Agreeing to a recommendation because you have not got alternative policies and then whingeing about it reflects a basic lack of policies and strategies,” he said.

He claimed that the legislation was neither rushed nor ad hoc, and said the Bill reflects the government’s response to a number of recommendations of the Rethinking Regulation report of the Banks Regulation Taskforce of January 2006.

Freehills partner Bob Baxt told Lawyers Weekly that while there may be some validity to Labor’s claims that more consultation would have been beneficial, he said at least Pearce and his team are now starting to try and do things in a more effective manner.

Baxt acknowledged that there is a tension for governments in making sure there is adequate regulation to deal with company failures, but not overdoing the regulation.

“I think that this Bill is the first step in trying to simplify a regulatory environment and making it more manageable and certainly more relevant in the context of what needs to be done in the Australian environment,” he said.

While Labor had claimed the legislation was rushed, Baxt said that this was to be expected. “There is some truth in the fact that it is fairly rushed, but it certainly more leisurely than it used to be. Legislation used to go through Parliament much more quickly than this.

He added that the regulatory framework has a long way to go. “But this is the first step, and if you look at it from that point of view I think Labor’s criticism is a bit naïve. If you see this as the only thing they are going to do then I think you could say ‘well yes, absolutely you need more time’,” he said.

According to Baxt, the Bill is an important step in trying to undo a number of years of over regulation that was a result of “knee-jerk reactions” by government. He added that “the knee-jerk reactions by the Liberal-National Party Government is no different from what we saw in the Labor government in the past”.

For Baxt, the latest raft of legislation is a step in the right direction, towards a simpler regulatory regime.

“I think part of the problem in this country is that we have had so many ad hoc changes to our corporate law, it’s such a mess now, is that the only way to fix it up is to scrap it all and start again. But that won’t happen — it won’t happen, it can’t happen. But being pragmatic, what we need to do is get certain areas of our corporate law and make it more manageable,” he said.

Pearce said stakeholders had included the Australian Bankers’ Association, the Insurance Council of Australia, the Investment and Financial Services Association and the Business Council of Australia, all of which welcomed the reforms when they were introduced into Parliament last month.