Westpac Banking Corporation (Transfer Of Incorporation) Bill
The Hon. I. M. MACDONALD (Parliamentary Secretary), on behalf of the Hon. M. R. Egan [5.21 p.m.]: I move:
I seek leave to have the second reading speech incorporated in Hansard.
That this bill be now read a second time.
This bill provides for the Westpac Banking Corporation to be registered as a public company limited by shares under the Corporations Law if a special resolution to that effect is approved at a general meeting of its shareholders and, after its registration, as a public company limited by shares under the Corporations Law, the repeal by proclamation of the Governor of legislation that applies specifically to Westpac, such as the bank of New South Wales Act 1850, which first constituted the bank as a body corporate.
Westpac's corporate status derives from the Bank of New South Wales Act of 1850. In 1982, the Bank of New South Wales (Change of Name) Act 1982 provided for the corporate name of the then Bank of New South Wales to be changed to Westpac Banking Corporation. At present, Westpac is not a company registered under the national scheme contained in the Corporations Law and the corporations regulations. However, certain provisions of those national scheme enactments have been applied to Westpac by the Westpac Banking Corporation Act 1995. It is anomalous that one of Australia's leading companies is not wholly subject to the national scheme.
At Westpac's annual general meeting held in December 1999 Westpac shareholders approved the amendment of Westpac's constitution, requiring that its board of directors seek legislative machinery to enable its registration under, and participation in, the national scheme. This bill provides that machinery. It is proposed that Westpac shareholders have a further opportunity to authorise Westpac's transfer to the national scheme at the annual general meeting to be held in December this year. The bill authorises Westpac to apply for registration as a public company limited by shares under part 5B.1 of the Corporations Law, provided that Westpac complies with the procedural requirements set out in the bill.
A transfer resolution is required to be passed by a majority of at least 75 per cent of those shareholders entitled to vote in person, by proxy or by a representative. At least 21 days notice of the general meeting and of the resolution must be given. This is consistent with the requirements of the Corporations Law. The mandate given by Westpac shareholders in December 1999 that a proposal to change the bank's status be later submitted to shareholders was qualified. Any transfer must be achieved without undue cost.
To that end, the bill provides that once Westpac is registered under the national scheme, it is not required to have or use the word "limited" in its name, even though public companies limited by shares that are registered under the Corporations Law are, generally speaking, required to have that word in their names. The reason for this provision is that, were Westpac required to change signs at each of more than 1,100 branches, as well as reprint banking forms, promotional literature, letterhead paper and other documents, the cost and inconvenience would be prohibitive.
My department has raised this matter with the Hon. Joe Hockey, Commonwealth Minister for Financial Services and Regulation, who has granted this concession to avoid that considerable expense for a company that enjoys a strong public profile and recognition of its name. For the same reason the bill also enables Westpac to use the words "Australian Registered Body Number", or the abbreviation ARBN, before its Australian company number [ACN] for a transitional period of two years after it is registered under the national scheme.
Ordinarily, when registered under the Corporations Law, a company would be issued with an ACN and would be required to display that number preceded by the prefix ACN on its public documents, negotiable instruments and outside each of its places of business. Allocation of an ACN to Westpac would also cause prohibitive costs and inconvenience as its current ARBN is already displayed on its signs and stationery. Were Westpac to incur those costs now, it would unnecessarily duplicate the later costs of displaying the new Australian business number [ABN], a requirement arising from the introduction of the goods and services tax.
These provisions of the bill reflect the transitional periods allowed at the Federal level for the display of the new ABN. I draw attention to the registration machinery provided in the bill. If the Attorney General is satisfied that the shareholders have passed a transfer resolution, there has been no order of the Supreme Court declaring that resolution invalid, and Westpac has lodged an appropriate transfer application with ASIC Australian Securities and Investments Commission, the Attorney General may issue to Westpac a registration certificate.
Once a registration certificate has been issued, Westpac is taken to be incorporated under the Corporations Law. Schedule 1 to the bill contains savings, transitional and other provisions. These are to ensure that Westpac's capital provisions are able to comply with current provisions of the Corporations Law. There are a range of other transitional provisions. This bill provides for Westpac, one of Australia's largest financial institutions, to participate in and be subject to a regulatory scheme that reflects the national character of its operations. This bill provides appropriate protection for both consumer and shareholder alike and is an example of the Carr Government's commitment to the application of regulatory regimes that match the nature of each industry and the market in which it operates. I commend the bill to the House.
The Hon. J. M. SAMIOS [5.21 p.m.]: The purpose of this bill is to allow the Westpac Banking Corporation, known as Westpac, to register as a public company limited by shares and governed by the Corporations Law. Westpac was established as a joint company and was incorporated by the Bank of New South Wales Act 1850, when large public companies did not exist in their modern form and there was no broad scheme for the establishment and regulation of companies. Although some provisions of the Corporations Law apply to Westpac, and although as a public company it is subject to the regulation of the Australian Stock Exchange, it is not registered as a participant in the national scheme administered by the Corporations Law. The bill provides for the Attorney General to register Westpac's incorporation due to High Court challenges to the Corporations Law and the powers of the Australian Securities and Investments Commission [ASIC].
At the November 1999 annual general meeting Westpac shareholders agreed in principle to the transfer of Westpac to regulation under the Corporations Law. The bill is necessary to enable that transfer to take place, and it gives Westpac the authority to seek incorporation as a company under the Corporations Law. A special resolution is required to be passed by at least 75 per cent of voting shareholders that it be incorporated. The bill also provides a mechanism to alter the capital structure of Westpac to make it consistent with the rules that apply to companies registered under the Corporations Law. There are ongoing concerns, of course, about Westpac branch closures but that is not the essence of concern in this bill. As I have indicated, the bill is concerned with allowing the Westpac Banking Corporation to register as a public company. The Opposition has consulted with Westpac, ASIC, and the Commonwealth Treasury and supports the bill.
The Hon. J. F. RYAN [5.24 p.m.]: The registration of Westpac as a public company is an historic event for an important New South Wales company. Westpac originated as the Bank of New South Wales, and most of us would remember it as the Wales bank when we were schoolkids It is one of New South Wales' and this nation's earliest trading companies. The Bank of New South Wales was set up under the governorship of Governor Lachlan Macquarie. It then imported to New South Wales Spanish currency which became the holey dollar and the dump, and set up the initial infrastructure for commercial transactions.
Obviously, Westpac has expanded to become almost a multinational company. It is a little sad to have it leave its special link with New South Wales of being incorporated in this State to venture into a national corporate structure. However, that is appropriate as Westpac is now an important company for both New South Wales and for Australia as a nation. I thought it worthwhile to make that historical point as this House passes the bill that is necessary to sever one of the last specific links Westpac has with the State of New South Wales and recognises that it is probably one of our most distinguished and impressive companies.
The Hon. Dr A. CHESTERFIELD-EVANS [5.26 p.m.]: The Australian Democrats have no particular problem with this bill, but when bills like this are introduced it is worth noting their significance. Long before the Corporations Law, Westpac was set up as the Bank of New South Wales for the good of the colony. I do not know whether it had a charter similar to that of the Commonwealth Bank, which was set up to stop the profiteering that was perceived to have occurred in the Great Depression, but it is worth noting that banks are a service industry that allow all other service industries to function. In recent times the Commonwealth Bank, if it had preferred to do so, could have chosen a cost structure that reflected its costs and not stacked a profit margin on top of that.
I do not understand the banks' pricing system, and I believe most people feel the same way. However, I accept that most people are unhappy with banks. I am concerned that banks consistently appear at the top of the list of Australian companies with the highest profits. Since the statutory deposit ratio ideal has been taken from banks, effectively they can lend the same money many times, which, of course, means their profits can multiply. Increasingly, companies have adopted pricing policies. I suppose cost was factored into those pricing policies years ago. There was then a margin which was considered to be the profit. That was a small percentage of turnover and that was regarded as right. If banks were run in the interests of customers rather than shareholders, that amount would be minimised. If they were run in the interests of shareholders, that amount would be maximised within the tolerance of the customers and the market, assuming it was a perfect market and not an oligopoly market.
If a bank based its prices on costs and consumer benefit its prices might be lower than those of banks whose prices were based on the benefits of shareholders, and its effect in the market might be to reduce banking costs to customers and thus to increase the efficiency of Australian business. Westpac is now shareholder owned and trying to compete with other banks. This bill removes a historical anomaly. We might mourn the day when there was a concept of a common wealth and that pricing policies reflected costs rather than profits.
I have a letter from Westpac stating what a good corporate citizen it is. It refers to the address from David Morgan to the Committee for Economic Development of Australia, CEDA, saying, "We are all very good chaps. Please pass this bill." I am sure that they are all very good chaps. The day may yet come when we have to consider pricing policies that are for the common good and not merely for the shareholders. Wealth is transferred continually by the essence of bank lending; banks lend to the people who have the most money. Banking also transfers wealth from customers to shareholders. We have to look at these structures again. Historically, we are undoing a relic. Perhaps one day we will recreate a bank that actually changes its priorities.
Demonstrations will occur next week on 11 September in Melbourne. People are angry and some are confused about why there is a world economic system but not a corresponding world taxation system or a world environmental or social good system. People will protest at the meeting of the world economic forum. They do not yet have concrete alternative proposals but in the days of the transnational corporation that has no taxable home or that minimises its taxes with transfer pricing governments will have to look at the way corporations work from a consumer and citizen perspective rather than simply from a market and shareholder perspective. The day may come when we consider acting in a different direction. This bill represents a trivial step in a direction in which the overwhelming majority of companies are moving.
The Hon. R. S. L. JONES [5.33 p.m.]: I support the Westpac Banking Corporation (Transfer of Incorporation) Bill. Currently Westpac is incorporated under legislation dating back to 1850, when there was no Companies Act under which companies could be formed and registered. Groups of shareholders wishing to form a limited liability company had to promote an Act of Parliament covering their project in order to enjoy limited liability. By the 1860s it was realised that company incorporation by individual Act of Parliament was onerous and cumbersome. So Parliament enacted a Companies Act bringing into existence a Companies Office, which henceforth carried out the task of company registration and regulation.
The Bank of New South Wales, as it was—I wish it had stayed as the Bank of New South Wales—is the only company of significance to have held out from registration under the Companies Act and its successor the Corporations Law. But in practice the bank has conducted itself in conformity with the general law. So the change is more of a technical nature and simplification for the bank. It has no actual effect; it just tidies up an anomaly that has existed for many years.
The DEPUTY-PRESIDENT (The Hon. J. R. Johnson): Honourable members, I wish to address the House on the matter before us. It is significant to note that when Governor Lachlan Macquarie sent for Dr Redfern, the Surgeon-General, and asked him to get together some people to found a bank Dr Redfern's chambers were in this very building, in the Greenway room. When we are discussing a bill that relates to Westpac Banking Corporation and its predecessor the Bank of New South Wales we should not let the occasion pass without referring to the part played by this establishment over the years in various bills to assist Westpac and noting that the embryonic stages of the bank occurred in this very building.
The Hon. I. M. MACDONALD (Parliamentary Secretary) [5.36 p.m.], in reply: I thank honourable members for their contributions to debate on this important bill, which I commend to the House.
Motion agreed to.
Bill read a second time and passed through remaining stages.