Australian Regulatory Compliance Review

Privacy Commissioner publishes case notes 1 - 7 for 2008

The Privacy Commissioner has released the first case notes for 2008.

In A v Private School [2008] PrivCmrA 1 the OFPC found that a private school was entitled to refuse access to certain documents held by it relating to an investigation of a student as giving access to the investigation documents would amount to an interference with the privacy of other individuals as the individuals in question had provided that information on the understanding that their details would not be revealed to the complaint for fear of reprisal.

In B v Hotel [2008] PrivCmrA 2 - The OFPC found that the disclosure of details of one hotel guest by a hotel to another hotel guest was an improper disclosure of personal information by an organisation. In the unusual circumstances of this case, the complaint was resolved by conciliation and an apology.

In C v Health Service Provider [2008] PrivCmrA 3 a health service provider disclosed details of a letter from a member's relative to the member.The matter was resolved by an apology to the relative by the provider.

In D v Health Service Provider [2008] PrivCmrA 4 a patient of a private clinic complained about its security of personal information when advised that notes about her had been lost or destroyed. As there was no evidence the notes had her name or identifying details the matter was not taken further.

In E v Insurance Company [2008] PrivCmrA 5 an insured complained that the insured's insurance company disclosed the complainant's contact details to the third party who was involved in the car accident. The third party subsequently contacted the complainant via telephone wanting to discuss the amount of money the third party was being required to pay as a result of the accident. The insurer acknowledged it was an improper disclosure of personal information and apologised and paid a cheque to the complainant in settlement of the privacy complaint.

In F v Australian Government Agency [2008] PrivCmrA 6 the complainant, a former employee of a government agency, complained that their personal record held by the agency had been accessed by a current employee of the agency. The employee, for reasons unrelated to their employment, used the records to locate where the complainant was living. The complainant stated this caused them to fear for their safety, and resulted in the complainant having to change their name and place of residence.  The Commissioner took the view that the agency had not taken reasonable steps in the particular circumstances to protect the complainant's personal information and that the complainant's personal information had been used for an unauthorised purpose. The complainant accepted a confidential settlement for costs associated with the complainant's change of name and place of residence.

In G v Financial Institutions X and Y [2008] PrivCmrA 7 the complaint related to the disclosure of a person's information under significant cash transaction reports to AUSTRAC. Although 1 of the financial institutions made an error in respect of the person's occupation (which it corrected) the OFPC decided that both organisations were required by law to make such disclosures and could rely on the exception in National Privacy Principle 2.1(g).

Code of Banking Practice Review

The Independent Reviewer has published an Issues Paper(pdf) which outlines draft recommendations on changes to the Code of Banking Practice. The recommendations include a recommendation that a general principle of responsible lending be included in the set of guiding principles for the Code.

Regulation of Direct Offshore Foreign Insurers – Draft Regulations

On 8 April 2008, the Assistant Treasurer announced the limited exemption arrangements that would apply under the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. The Assistant Treasurer also announced that data would be collected from AFSL holders in relation to business placed with discretionary mutual funds and direct offshore foreign insurers and that consumer protection would be enhanced.

The draft regulations set out the data collection arrangements and consumer protection measures.

Data collection from AFSL holders will now commence from 1 October 2008.

Submissions are invited on the draft regulations and explanatory material by 2 June 2008.

Mandatory Comparison Rates (MCR) Review

The Ministerial Council for Consumer Affairs (MCCA) has agreed to reform the scheme of Mandatory Comparison Rates in the Consumer Credit Code. There was in principle agreement to repeal the requirement to provide consumers with “schedules” of comparison rates, while the format and calculation of comparison rates in credit advertisements will be substantially revised.

MCCA has publicly released the Final Impact Statement on Mandatory Comparison Rates (pdf).

The Statement concludes that:

The effect of ceasing the MCR regime would appear to have minimal negative impacts on credit providers and a slightly increased risk of confusion for consumers that is partly offset, in the mortgage industry particularly, by the existence and growing use of secondary market players: independent information providers and brokers...

It has not been possible to demonstrate that a net benefit to the community will be derived from the continuation of the MCR regime in its current form, resulting in a strong case for MCR to sunset.

APRA Service Charter

The Australian Prudential Regulation Authority (APRA) has released the APRA Service Charter (pdf) which explains how APRA carries out its role and what those who deal with the prudential regulator can expect.

First Home Saver Accounts Bills introduced

The Treasurer has introduced the 3 Bills that contains the legislation for First Home Saver Accounts:

• The First Home Saver Accounts Bill 2008, which establishes the accounts, provides for the payment of the Government contribution and governs their operation and prudential regulation.
• The First Home Saver Accounts (Consequential Amendments) Bill 2008 which contains consequential amendments to other Commonwealth laws, chiefly the taxation and corporations law.
• The Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 which imposes the misuse tax to clawback benefits obtained by an account holder who improperly uses the accounts.

The  main features of the accounts are as follows:

• An individual can open an account if they are aged 18 or over and under 65; have not previously purchased or built a first home in which to live; do not have, or have not previously had, a First Home Saver Account; and provide their tax file number to the provider.
• Personal contributions can be made by the account holder or a parent or grandparent, and can only be made from after-tax income.
• The account is supported by Government contributions.  The Government will contribute an extra 17 per cent on the first $5,000 of personal contributions made into the account each year.  This will be indexed to average weekly ordinary time earnings.  This means that an individual contributing $5,000 will receive a Government contribution of $850.
• There is an overall account balance cap of $75,000, which is indexed to average weekly ordinary time earnings.  Earnings can still accrue once the cap is reached.
• In addition, earnings on account balances are taxed at the account provider level at the statutory rate of 15 per cent, rather than in the hands of the individual account holder at their marginal tax rate.
• As a general rule, in order to access money to purchase a first home, personal contributions of at least $1,000 must have been made in each of at least four financial years.
• Individual contributions are not taxed as they are made from after-tax income; Government contributions are not taxed and withdrawals to purchase a first home are not taxed.

From 1 October 2008, accounts can be offered by banks, building societies and credit unions, public offer superannuation providers, life insurance companies, and friendly societies.

The  Bill also provides a framework to prudentially regulate public offer superannuation  providers. 

Providers that are banks, building societies and credit unions; and life insurance companies will continue to be prudentially regulated under the Banking Act 1959 and Life Insurance Act 1995 respectively.

Same-Sex Discrimination and Commonwealth superannuation schemes

Attorney-General Robert McClelland has introduced  the Same-Sex Relationships (Equal Treatment in Commonwealth Laws – Superannuation) Bill 2008 to remove same-sex discrimination from Acts governing Commonwealth superannuation schemes.

The Bill makes amendments so that same-sex couples are no longer denied the payment of death benefits from superannuation schemes or the tax concessions on death benefits currently made available to opposite-sex couples.

The superannuation schemes covered by the reforms are:

• the Commonwealth Superannuation Scheme
• the scheme under the Superannuation Act 1922
• the Defence Force Retirement and Death Benefits Scheme
• the Defence Forces Retirement Benefits Scheme
• the Judges' Pensions Scheme
• the Federal Magistrates Disability and Death Benefits Scheme
• the Governor-General Pension Scheme, and
• the Parliamentary Contributory Superannuation Scheme.

Other Commonwealth superannuation schemes, such as the Military Superannuation and Benefits Scheme and the Public Sector Superannuation Scheme, will be amended by delegated legislation. 

Consumer Credit Code update

The MCCA has agreed to refinements to the Consumer Credit Code. The amendments are intended to enhance the operation of the Consumer Credit Code by:

1. Tightening current exemptions to the Code for short term credit and pawnbrokers ;
2. Dealing with abuses of business purpose declarations aimed at avoiding the Code;
3. Enhancing consumer remedies under the Code by broadening existing powers of courts to review credit fees and charges and changes of interest;
4. Providing Government Consumer Agencies with standing to conduct proceedings under the Code on behalf of consumers;
5. Prohibiting lenders from taking ‘blackmail’ security over essential household items; and
6. Requiring that consumers be provided with information about their rights and responsibilities regarding direct debit payment arrangements

Reserve Bank Review of settlement practices for Australian equities

The Reserve Bank has undertaken an extensive review of settlement practices in the Australian equity market (pdf). This review sets out some possible modifications to current arrangements in order to avoid the significant delays in the settlement of Australian equities which occurred on 29 and 30 January 2008.

Extension of time for licensing of foreign insurers

The Australian Prudential Regulation Authority (APRA) has announced that the deadline for foreign insurers wishing to apply for a licence to write business in Australia after 1 July has been extended.

The application deadline will now be 30 June instead of 31 May. Those foreign insurers who submit their application and pay the application fee by 30 June will be allowed to continue to operate in the Australian market for up to six months while their application is processed.

Following the passage of the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 on 13 September 2007, foreign insurers wishing to continue operating in the Australian market must be authorised by APRA.

Do Not Call Register update

ACMA has published details of registrations on the Do Not Call Register since its launch in May 2007. As at 30 April 2008, 2.27 million people had registered as not wishing to be called.

ACMA is also inviting comment on the new fees telemarketers will have to pay to access the Do Not Call Register from 1 July 2008.

A discussion paper has been developed to solicit comment from the telemarketing industry on two access fee pricing options for the Register.

National business names registration scheme

Commonwealth, State and Territory Small Business Ministers have agreed in-principle to a national business names initiative which will establish a one-stop online shop for businesses to apply and pay for a national business name online through a single application covering both a business name and Australian Business Number (ABN).

To register a business name nationally at present, businesses have to apply separately in each State and Territory and pay a fee eight times at a total cost of around $900.

The new system will be much cheaper and quicker, enabling a single registration for a single fee.

Those businesses that want to register a name in a single State or Territory will still be able to do so within the national system.

Reform of Australia’s consumer product safety regulatory arrangements

The Ministerial Council on Consumer Affairs (MCCA) has agreed to implement significant reform of Australia’s consumer product safety regulatory arrangements, for the benefit of consumers and businesses. (see the communique)

The reforms will:

• remove legal uncertainty for businesses operating across state borders by creating a single national law for product safety, including product bans, standards and recalls;
• enhance protection for consumers by allowing the Australian Competition and Consumer Commission and the State and Territory offices of fair trading to jointly enforce the national law; and
• reduce regulatory overlap by giving the Commonwealth sole responsibility for making permanent product bans and safety standards.  The States and Territories will retain the power to issue interim product bans, which would remain in effect for 60 days with a capacity for a 30 day extension if necessary.

It is anticipated that the revised regulatory arrangements  will be fully implemented by 2010.

Ministers also agreed in principle to:

• Support the development and implementation of a new national harmonised, generic consumer law to apply in all Australian jurisdictions, based on the consumer protection provisions of the Trade Practices Act 1974 (TPA), with appropriate amendments which recognize best practice in state legislation.
• Identify provisions in existing State/Territory fair trading laws which should be retained as part of a national generic consumer law and consider the need for new provisions which would enhance the TPA into the future. This would include consideration of provisions dealing with unfair contract terms and heightened enforcement powers, as identified by the Productivity Commission and provisions on naming and shaming as discussed by the States and Territories.
• reform the scheme of mandatory comparison rates in the Consumer Credit Code. There was in principle agreement to repeal the requirement to provide consumers with “schedules” of comparison rates, while the format and calculation of comparison rates in credit advertisements will be substantially revised. The Review will be released publicly.
• the Commonwealth Government initiate a review of the implied terms/statutory warranty regime in the Trade Practices Act 1974 and state and territory fair trading/goods legislation with the aim of developing clear codified law that can be applied nationally.

Pocket Guide to the Australian Tax System

Treasury has issued a pocket guide which provides notes on the breakdown between Commonwealth Government, State and Local Government tax revenue, the tax breakdown, major tax expenditures, history of tax instruments, income tax rates, GST and excise rates.

Australia and the sub-prime crisis

John Edwards Chief Adviser, Financial markets, Macroeconomic Group, The Treasury has given a speech entitled "The Sub Prime Mortgage Meltdown Origins, Trajectories and Regional Implications - Australia's experience in the sub prime crisis" discussing how the sub-prime crisis affected Australia and our regulatory response .

High Court's first decision on GST: GST payable on forfeited deposit

In  Commissioner of Taxation v Reliance Carpet Co Pty Limited  [2008] HCA 22 the High Court decided that GST was payable on the deposit on a real estate sale which was forfeited to the seller when the seller terminated the contract upon default by the purchaser in completion of the sale.

Plain language in legislative drafting

If you've ever wondered how our laws are drafted, the Office of Parliamentary Counsel has issued several guides here. Note the use of "plain language", not "plain English".

The USA has passed the Plain Language in Government Communications Act. See this article for background on that Act and other resources.

Securities markets, stockbrokers and ASIC

In Securities markets, participants and ASIC  (pdf) Tony D'Aloisio, Chairman Australian Securities & Investments Commission, defends ASIC's role as an effective regulator in the recent market turmoil:

"While the issues which have arisen in the market have required ASIC taking action and, in the area of covered short selling, legislative change, overall the regulatory framework, stood up well and ASIC has played its proper role and continues to play its proper role with its supervision of the markets and in using its powers to conduct inquiries and investigations."

Looking to the future D'Aloisio identified the narrowing of ASX's role as a potential regulatory gap to which ASIC will dedicate more resources in order to improve confidence in the integrity of markets, even if potential additional costs arise from any duplication.

With respect to the broking industry, he said:

" ...changes have been, in more recent years, manifesting themselves in expanded product ranges, customer base (e.g. hedge funds, private equities and self managed super funds), in technology (e.g. computerised trading, interaction and direct market access) and in the emergence potentially of alternative trading systems and alternative clearing systems (and the increase in third party clearing).

We are also seeing examples of wholesale products being taken into the retail sector. For example in Opes Prime we have seen the use of stocklending in the retail sector.

The expansion of product ranges and the businesses of market participants have caused us to rethink and broaden our role. For example, with breach reporting (licensee breach reporting required under the Corporations Act), we note that brokers refer less breaches to us than other licensees of the financial economy. We would like to understand whether or not this is explained by having better compliancesystems. We also want to improve our supervision of how compliance departments in the broking houses handle market rumours. Balance sheet strength, particularly where retail investors may be involved, will be another area we wish to examine. "

Treasury and ASIC to review regulation of credit rating agencies

Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, has announced that he has asked the Treasury with the Australian Securities and Investment Commission (ASIC), to review the regulation of credit rating agencies (CRAs) and research houses in Australia.

Treasury and ASIC will seek input from the Australian Prudential Regulation Authority (APRA) and other relevant agencies, together with stakeholders from the investor, shareholder and superannuation communities.

In addition to CRAs, the review will examine financial product research houses, in particular the role they played in the provision of advice to investors in several major recent corporate collapses, such as Westpoint.

The review will commence work immediately and report to the Government within six months.

ASIC acts on insurance advice by Hallmark and debt collection by GE Money

ASIC has taken action over the insurance sales practices of GE Money's Hallmark companies and the debt collection practices of the GE Money consumer credit businesses.

Hallmark insurance advice licence conditions imposed

ASIC has imposed additional conditions on the Australian financial services license (AFSL) of GE Money’s Hallmark General Insurance Company Ltd and Hallmark Life Insurance Company Ltd after those companies failed to comply with commitments each made in a 2006 Enforceable Undertaking (EU) to ASIC.

ASIC found that parts of the insurance advice and sales business were often poorly managed and not meeting the legal obligation requiring there be a ‘reasonable basis’ for personal advice given to customers. Specifically, ASIC was concerned that staff were selling insurance to customers whose needs had not been identified or understood.

As the Hallmark companies did not comply with a number of key undertakings given to ASIC in 2006, the regulator decided  to impose conditions on the AFSLs of GE Money’s Hallmark companies to replace  the 2006 EU.

These additional license conditions require the Hallmark companies:

• to engage an independent expert, over a period of up to 15 months, to review and assess the advice, sales, training, management and corporate governance processes in its branch network and make recommendations to correct any deficiencies, to ensure these processes are at an industry best practice level;
• to engage the same expert to assess the steps already taken by the Hallmark companies to compensate their customers and make recommendations as to any additional compensation steps that may be necessary;
• if the expert makes recommendations, to provide ASIC with an Action Plan to implement those recommendations; and
• to provide ASIC with full details of the compensation already paid to customers by means of a director’s statutory declaration, by 18 July 2008.

Furthermore, the Hallmark companies are now required to limit the insurance advice their staff provide to ‘general advice’ only and not ‘personal advice’.

GE Money debt collection Enforceable Undertaking

Separate to the imposition of additional licence conditions on the Hallmark companies, GE Money has entered into an EU to address ASIC’s concerns about the debt collection practices of its consumer credit business. This is in response to consumer complaints about harassment from the debt collection practices of that business. Those practices included excessive or inappropriate contact with customers, contact at unreasonable hours and an inflexible approach to repayment arrangements.

As part of this EU, the GE Money consumer credit business is required:

• to engage an independent expert, over a period of two years, to review and assess its debt collection processes to ensure that it complies with the ASIC/ACCC Debt Collection Guidelines and make recommendations to correct any deficiencies;
• if the expert makes recommendations for improvements, to provide ASIC with an Action Plan to implement those recommendations;
• to pay compensation to affected customers in accordance with guidelines prepared by the Banking and Financial Services Ombudsman; and
• to arrange and pay for an industry workshop to promote best practice in the debt collection industry.

 

National Health Workforce Registration and Accreditation Scheme

The Council of Australian Governments (COAG) at its meeting of 26 March 2008 signed an Intergovernmental Agreement on the health workforce.

This agreement will  create a single national registration and accreditation system for nine health professions: medical practitioners; nurses and midwives; pharmacists; physiotherapists; psychologists; osteopaths; chiropractors; optometrists; and dentists (including dental hygienists, dental prosthetists and dental therapists).

The new scheme will maintain a public national register for each health profession that will ensure that a professional who has been banned from practising in one place is unable to practise elsewhere in Australia.

ASIC approves Financial Ombudsman Service

ASIC has approved the new Financial Ombudsman Service (FOS).

FOS will represent the merger of the three biggest complaints schemes operating in the financial services industry – the Financial Industry Complaints Service (FICS), the Banking and Financial Ombudsman Service (BFSO) and the Insurance Ombudsman Service (IOS).

Together, FICS, BFSO and IOS deal with most consumer complaints about financial services and cover the vast majority of retail financial services providers, including banks, credit unions, life and general insurance companies, stockbrokers, investment managers and financial planners. Between them, the schemes dealt with about 10,000 consumer disputes in the last reporting period and over 100,000 telephone enquiries.

FOS will be operational from 1 July 2008. In the first instance, FOS will continue to operate the rules and procedures of the three existing schemes, with a view to operating under a single set of rules no later than 1 January 2010.

Consumers and investors who want to refer a complaint to FOS can contact the scheme by calling  1300 780 808  .

Review of Australia's Foreign Source Income Tax Rules

The Board of Taxation has released the Board's issues papers on possible reforms to Australia's foreign source income anti-tax-deferral regimes (the controlled foreign company rules, the foreign investment fund rules, the transferor trust rules and the deemed present entitlement rules).

Review of APRA Prudential Decisions

The Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 has been passed. The Act reforms review mechanisms for administrative decisions made by the Australian Prudential Regulation Authority (APRA). (The Bill is here) Act as passed

The Act includes measures to:

• Introduce a court-based process for the disqualification of an individual under legislation administered by APRA;
• Streamline APRA's directions powers;
• Remove the need for ministerial consent from certain matters, and
• Expand the availability of merits review for certain decisions

The Act affects decisions under:

• the Banking Act 1959
• Insurance Act 1973
• Life Insurance Act 1995
• Retirement Savings Accounts Act 1997
• Superannuation Industry (Supervision) Act 1993
• Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007

Farm management deposit scheme

The tax law relating to farm management deposits will be amended to remove a current minor inconsistency so that an eligible primary producer can also access the tax benefits of withdrawing their farm management deposit early when:

• the primary producer is in an area that has previously been declared to be in exceptional circumstances
• the exceptional circumstances declaration did not apply to the primary producer because of their producer status
• at a later time the exceptional circumstances declaration is extended to apply to the primary producer, and
• the primary producer made the farm management deposit prior to the time the exceptional circumstances declaration applied to them.

The change in the law will be effective from 1 July 2002.

Tax Laws Amendment (2008 Measures No. 1) Bill 2008

Tax Laws Amendment (2008 Measures No. 1) Bill 2008 - Explanatory Memorandum

Farm management deposits do not generally have any tax benefit where they are withdrawn within 12 months of deposit. Exceptions include where the deposit is withdrawn because the owner dies, becomes bankrupt, ceases to be an eligible primary producer, or transfers their deposit to another financial institution.

A further exception is where a primary producer carries on a primary production business in an area that is declared to be in exceptional circumstances. However, although the declaration of exceptional circumstances may apply to the area in which the primary production business is carried on, it may not apply to all primary producers in that area.

Government releases draft Personal Property Securities Bill

Attorney-General Robert McClelland has released a draft of a Commonwealth Bill for personal property securities (PPS). It will replace over 70 pieces of Commonwealth, State and Territory law.

PPS involves taking a security interest in all types of property other than real estate, such as for cars, boats and livestock. The Commonwealth PPS Bill will be underpinned by a national Register so security interests can be searched easily on one online database. It will commence in May 2010.

PPS is one of the 27 “regulatory hotspots” on the agenda of the Council of Australian Governments Business Regulation and Competition Working Group.

Submissions are invited by August 15th 2008.

Background: The Attorney-General's recent speech

ASIC extends disclosure relief for rights issues

ASIC has released Regulatory Guide 189: Disclosure relief for rights issues (RG 189). This regulatory guide explains the relief ASIC has given in Class Order (CO 08/35) Disclosure relief for rights issues. This includes relief:

• for accelerated offers to institutions;
• from the requirement to lodge multiple cleansing notices;
• for disposal of a shortfall (e.g. through a book-build); and
• to make offers of shares to convertible security holders

CO 08/35 also gives technical relief in relation to the treatment of foreign holders, offers of stapled securities and rounding of entitlements.

The aim of the disclosure exemption is to encourage companies to use pro rata rights issues, rather than placements, so retail investors can participate,.

ASIC considers that any rights issue should fall within the disclosure exemption where it provides an equal opportunity to all holders to participate and does not compromise retail investor protection.

AML/CTF Act and Australian financial services licence holders

AUSTRAC has released Public Legal Interpretation 2 of 2008 (pdf) which provides AUSTRAC’s legal view of the meaning and scope of item 54 of table 1 in section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. In particular the Public Legal Interpretation explores the concept of what acting in the capacity of the holder of an Australian financial services licence means in the context of the AML/CTF Act.

Reporting entities providing designated services falling within item 54 have reduced obligations under the AML/CTF Act regarding customer identification and record keeping.

AUSTRAC is of the view that item 54 comprises two distinct elements, both of which must be satisfied for a person to be engaging in an item 54 designated service. Those two elements are that the person providing the designated service must:

• be a person who is the holder of an Australian financial services licence and who is acting in the capacity of the holder of that licence; and
• make an arrangement for a person to receive a designated service (other than a service covered by item 54).

AUSTRAC's interpretation is that if the holder of an Australian financial services licence provides advice, in the capacity of the holder of a licence, to a person and then arranges for a person to receive a designated service that is not a financial service (as defined in the Corprations Act), such as a loan, then item 54 will not apply.

The Public Legal Interpretation contains practical examples of the application of Item 54.

Review of Australia’s tax system

Treasury has released the terms of reference for the review of Australia’s tax system confirmed by the Treasurer in his Budget speech.

The review will encompass Australian Government and State taxes, except the GST, and interactions with the transfer system. In doing so the review will reflect the government’s policy not to increase the rate or broaden the base of the goods and services tax (GST); preserve tax-free superannuation payments for the over 60s; and the Government’s announced aspirational goals for personal income tax.

The review will be conducted in several stages. An initial discussion paper will be released by the end of July 2008. The review panel will provide a final report to the Treasurer by the end of 2009.

Register of Lobbyists finalised

Lobbyists must register on the Commonwealth's Register of Lobbyists.

A lobbyist is defined in clause 3 of the Lobbying Code of Conduct to mean a person, company or organisation who conducts lobbying activities on behalf of a client or whose employees conduct lobbying activities on behalf of a client. These lobbyists are sometimes known as consultant lobbyists, or third party lobbyists.

The Code does not apply to in-house lobbyists, such as government relations staff employed by companies to make representations to government on behalf of the company that employs them, or staff employed in peak industry bodies or trade unions who make representations to government on behalf of their industry or their members. These people are not required to register.

There are a number of exclusions from the definition. These include:

1. charitable, religious and other organisations or funds that are endorsed as deductible gift recipients
2. non-profit associations or organisations constituted to represent the interests of their members that are not endorsed as deductible gift recipients
3. individuals making representations on behalf of family members or friends about their personal affairs
4. members of trade delegations visiting Australia
5. persons who are registered under an Australian Government scheme regulating the activities of members of that profession, such as registered tax agents, Customs brokers, company auditors and liquidators, provided that their dealings with Government representatives are part of the normal day to day work of people in that profession, and
6. members of professions, such as doctors, lawyers or accountants, and other service providers, who make occasional representations to Government on behalf of others in a way that is incidental to the provision to them of their professional or other services. However, if a significant or regular part of the services offered by a person employed or engaged by a firm of lawyers, doctors, accountants or other service providers involves lobbying activities on behalf of clients of that firm, the firm and the person offering those services must register and identify the clients for whom they carry out lobbying activities.

The Register of Lobbyists will be fully operational from 1 July 2008. From that date, any lobbyist who wishes to contact a Government representative for the purpose of lobbying activities must be registered and must agree to comply with the requirements of the Code.

The Register is a public document that contains the following information about  lobbyists who make representations to Government on behalf of their clients:

• the business registration details and trading names of each lobbyist including, where the business is not a publicly listed company, the names of owners, partners or major shareholders, as applicable
• the names and positions of persons employed, contracted or otherwise engaged by the lobbyist to carry out lobbying activities, and
• the names of clients on whose behalf the lobbyist conducts lobbying activities.

See Open and Shut for comment.

Budget details for business

The Budget details have been released. The thrust of the Budget is delivery of election announcements; the Budget reveals the conditions and costings.

Worth noting from the Treasurer's speech:

Supporting business

Mr Speaker, the Government supports the aspirations of Australian business, including small business, for a simpler tax system and less regulation.

Our nation has the potential to be a financial services hub in the Asia Pacific Region - the fastest growing region in the world. To support this ambition, the Budget begins the process of significantly reducing the withholding tax, by reducing the current interim rate of 30 per cent to a final rate of 7.5 per cent for most non resident investors.

This Budget confirms our commitment to a comprehensive agenda of regulation reform - cutting red tape and making it easier for business, particularly small business, to deal with government.

To improve innovation and productivity, the Government will invest $251 million over five years to establish Enterprise Connect Innovation Centres....

COAG Reform Fund

Where funds are used to finance capital projects with the States, they will be distributed to the States from the three new funds I have just announced through a new Council of Australian Governments (COAG) Reform Fund.

The COAG Reform Fund will also distribute funding provided in future budgets to the States for recurrent expenditure in areas of COAG national reforms, through new National Partnership payments.

In 2008 09, the States will receive $78.6 billion in total payments, an increase of 4.8 per cent. And new financial arrangements will allow all levels of government to work together to improve outcomes and reduce costs...

Australia's future tax system

Tonight, I confirm the most comprehensive review of Australia’s tax system since World War 2. The Australia’s Future Tax System (AFTS) review will be reporting progressively from this July through to the end of 2009.

Treasury details

Revenue details are in Budget Paper 2 starting with Treasury's delivery of the Government's election commitments including the income tax cuts from 1 July 2008:

                                                                                                                                                                                                                                                                                                                   

Current			From 1 July 2008			From 1 July 2009			From 1 July 2010
Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)		Taxable income       ($)	Rate       (%)
0 - 6000	0		0 - 6000	0		0 - 6000	0		0 - 6000	0
6,001 - 30,000	15		6,001 - 34,000	15		6,001 - 35,0000	15		6,001 - 37,000	15
30,001 - 75,000	30		34,001 - 80,000	30		35,001 - 80,000	30		37,001 - 80,000	30
75,001 - 150,000	40		80,001 - 180,000	40		80,001 - 180,000	38		80,001 - 180,000	37
150,001 +	45		180,001 +	45		180,001 +	45		180,001 +	45

Other Treasury -related announcements can be found here including:

• Family trusts
• Political donations — removing tax deductibility
• Capital gains tax — extend small business concessions
• Depreciation of computer software
• Employee share schemes — election requirements
• FBT refinements
• GST and the sale of real property
• Increasing the Luxury Car Tax
• Managed funds — changes to the eligible investment rules
• Taxation of Financial Arrangements

And here are the details of the Superannuation Clearing House Facility and First Home Saver Accounts.

Australian Government Budget 2008-09

The 2008-09 Budget Papers will be available after 7:30 pm, Tuesday 13 May 2008 from www.budget.gov.au and from Department of Finance and Deregulation, Australian Taxation Office, australia.gov.au and Parliament of Australia.

Treasurer Wayne Swan's interview with Laurie Oakes yesterday foreshadowed the following announcements:

• the tax on luxury cars will increase from 25 per cent to 33 per cent;
• a comprehensive review of our tax system. "We'll look at personal taxation. We'll look at the transfer payment system. We'll look at how that affects individuals, how is affects families, how it affects retirees. We'll look at the company tax system, and we'll also look at all of the implications, say, of an emissions trading system for taxation as well...Federal, local government taxes and state government taxes – a comprehensive review of  the relationship between all of those...we have ruled out any broadening of that base of the GST  or any increase in the GST rate...we've  ruled out any change to tax-free super "
• an increase in the threshold at which the Medicare levy commences.

Nine wins Ice TV appeal

In Nine Network Australia Pty Limited v IceTV Pty Limited  [2008] FCAFC 71 the Federal Court of Australia Full Court allowed Nine's appeal against the original decision (discussed here) which permitted Ice to reproduce Nine's TV schedules in electronic form.

The Full Court decided that Ice TV had infringed Nine’s copyright in its television program schedules by indirectly copying  a substantial part of the television guides.

On the issue of substantiality of the copying the Court decided:

Ice’s use of time and title information, derived ultimately from the Weekly Schedules, involved the reproduction of more than a slight or immaterial portion of Nine’s copyright work...Ice appropriated many pieces of the time and title information, apparently on a weekly basis. It did so in order to create something commercially valuable out of templates that otherwise would have had no commercial value to it...When the quality of the material taken by Ice is considered, the substantiality of the part taken becomes even clearer.  Ice took, via the Aggregated Guides, precisely the pieces of information that reflected the exercise of skill and labour by Nine in determining the program for a particular day or other period.

On whether there was a link between the time and title information in IceGuide and Nine's Weekly Schedule the Court said:

Ice used Nine’s copyright work by indirectly copying time and title information from the Aggregated Guides.  Ice could not fulfil the requirements of its business model unless IceGuide incorporated accurate and up-to-date details of Nine’s programming schedule...Ice in fact updated and confirmed the accuracy of its database by accessing, on a regular and systematic basis, the Aggregated Guides.  Ice took time and title information from, and checked other details against, the Aggregated Guides.

For an analysis of the decision see Kim Weatherall's comments here.

ASIC announces results of its strategic review

The Australian Securities and Investments Commission (ASIC) has announced it has completed a strategic review.

The key changes ASIC is making in order to be closer to the market and to take emerging trends into account more quickly are:

• additional investment in market research and analysis;
• the appointment of an experienced External Advisory Panel drawn from a variety of sectors of the economy in order to advise ASIC’s Commission on market developments and potential systemic issues;
• abolition of the four current ‘silo’ directorates of ASIC and replacing them with 17 outwardly-focused stakeholder teams covering the financial economy (e.g. teams for retail investors and consumers, investment managers, investment banks, superannuation funds and financial advisors);
• additional resources directed to the supervision of brokers and intermediaries and to operators of exchange-traded products and to surveillance of exchange-traded markets; and
• a better balance between national and regional initiatives (e.g. more resources into Perth and Western Australia.). 

ASIC will retain its strong approach to enforcement. ASIC will now have six main enforcement or deterrence teams (instead of one large directorate). Each team will be tasked with specific responsibilities such as insider trading, major fraud, and international fraud and teams for other significant misconduct.

ASIC will retain current staff levels of 1600. ASIC will carry out the restructure within its current budget and has not asked the Government for additional resources for the 2008/09 financial year.

The new arrangements take effect from now and will be fully implemented during the next four months.

APRA releases research on superannuation fund governance

The Australian Prudential Regulation Authority (APRA) has released the results of its recent research on the governance practices of APRA-regulated superannuation funds (pdf).

The research, based on a detailed survey of superannuation trustees, found that there was little difference between the Corporate, Public Sector, Industry and Retail sectors in many areas of trustee policies and practices.  In some areas, however, there were statistically significant differences between the sectors, with Retail trustee practice more often different from that of the other sectors.

Some of the findings of the research include:

 

• Trustee directors of the large funds in the survey were typically well qualified, experienced and reasonably well trained in their trustee duties.
• Most boards (76 per cent) have both independent audit and regular self-assessment to review compliance with the Superannuation Industry (Supervision) Act 1993 and other regulations.
• Service providers are widely used in the superannuation industry, with the average fund using more than 13 service providers. Over 60 per cent of Retail directors have one or more associations with service providers, a figure that is double that for directors of Corporate funds and almost three times that for Public Sector or Industry funds.
• Relative to the other trustees, Retail trustees have fewer directors, shorter (but just as frequent) board meetings, and rely more on fund executives to take the initiative on most key decisions. By contrast, trustees in the other three sectors mostly make the decisions with the main input coming either from themselves or from their consultants.
• More than half of all Retail trustee directors are employed by related parties or by the fund itself, and very few are nominated by fund members. By contrast, many Industry, Corporate and Public Sector trustee directors are member-nominated.
• More than half of Corporate, Public Sector and Industry trustee directors are themselves members of their funds.  About one in five Retail trustee directors are members of their funds.

Productivity Commission Report on Consumer Policy: consumer protection law and product safety

The Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, has released the Productivity Commission's final report of the Review of Australia's Consumer Policy Framework.

The Productivity Commission's key recommendations include:

• a single national generic consumer law, based on the Trade Practices Act 1974 (TPA), which would apply in all States and Territories;
• identifying unnecessary or costly consumer regulation that only applies in a few States and Territories, or to one industry, and either removing them or, if justified, introducing nationally consistent rules;
• transferring regulation of credit providers and finance brokers to the Australian Government, with the Australian Securities and Investments Commission (ASIC) as the regulator;
• national laws to tackle unfair terms in consumer contracts;
• a national approach to product safety laws and enforcement; and
• new redress and enforcement powers for consumer regulators, including the ability to seek redress for non-parties, civil pecuniary penalties, banning orders and substantiation notices.

The Commission also recommended an enhanced role for the Australian Government in consumer policy.

The Government will consider the recommendations and, as agreed by the Council of Australian Governments (CoAG), respond formally at the end of October 2008.

National Rental Affordability Scheme - technical paper released

The National Rental Affordability Scheme is due to commence on 1 July 2008. The Government has released a Technical Discussion Paper on the planned operation of the National Rental Affordability Scheme (NRAS).

The Technical Paper outlines the key features of the Scheme including tenant eligibility, roles for all levels of Government and potential participants in the Scheme and the assessment criteria for tenders.

The Scheme will provide incentives to institutional investors to build 50,000 affordable rental properties by 2012. If market demand remains strong the Government will deliver a further 50,000 incentives from 2012 onwards.

The National Rental Affordability Scheme offers annual incentives for a period of ten years. The two key elements are:

• A Commonwealth incentive of $6,000 per year refundable tax offset or grant; and
• A State or Territory incentive of $2,000 per year in direct or in kind financial support.

Submissions close on 31 May 2008.

Energy reporting streamlining

The Minister for Resources, Energy and Tourism, the Hon Martin Ferguson AM MP and the Minister for Climate Change, Senator the Hon Penny Wong have announced a review of the Energy Efficiency Opportunities Regulations 2006 . Proposed amendments aim to better streamline energy use reporting with the Australian Government's new National Greenhouse and Energy Reporting (NGER) System.

Amendments to the EEO Regulations will make it easier for EEO member companies to collect and report one set of energy use data, reducing potential duplication.

Most companies will not be affected by the changes. However, for those companies that may have different sets of energy use under each scheme, the amendments will

• reduce the compliance burden; and
• avoid duplicative reporting requirements

The amendments are intended to commence on 1 July 2008, to coincide with the commencement of the NGER System.

Garnaut Review climate change update

The Garnaut Review's draft report will be released by 30 June 2008,

The interim report, issues papers and background and discussion papers can be found here.

AML and securities

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2008 (No. 2) (pdf) sets out exemptions for entities Issuing or selling a security or derivative provided one of the following conditions apply:

• the service is a disposal of a security or derivative through an agent who is doing so in the course of carrying on a business of disposing of securities or derivatives in the capacity of agent;
• the transaction occurs on a prescribed financial market (ie a stock exchange);
• it is an issue of an interest in a managed investment scheme (including an option to acquire an interest in a managed investment scheme) where the managed investment scheme is quoted on a prescribed financial market and it is under a distribution reinvestment plan or an initial public offering.

Queensland consumer credit interest rate capped

The Consumer Credit (Queensland) and Other Acts Amendment Bill was passed by the Queensland Parliament on 1 May 2008.

Background

Competing rights on insolvency: share lending agreement

In Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Limited [2008] FCA 594 the Federal Court had to decide on the competing rights of a lender (Beconwood) and a borrower (Green Frog, a part of the now insolvent Opes Prime Stockbroking group) under a Securities Lending Agreement. The lender had loaned its shares in return for a loan from the borrower Opes Prime. Opes Prime had obtained its funds from ANZ on the security of the shares it borrowed from Beconwood; ANZ wanted to sell those shares upon default by Opes Prime. ANZ could not sell the shares unless they had been transferred by Beconwood to Opes Prime so that it had the right to mortgage them to ANZ.

The lender Beconwood wanted its shares back upon payment of its debt to Green Frog. Otherwise its shares would be pooled with all the other Green Frog assets and it would become a mere creditor and lose its rights over those specific shares.

After a detailed analysis of the Agreement, including reference to US cases, the Court rejected the Lender's (Beconwood's) claim over the shares. The Court decided that Beconwood had legally transferred the shares to Green Frog (despite use of the lender/borrower terms).

The decision did not deal with claims ove