16 June 2004

Government Rejects Labor's Clerp 9 Amendments as 'Regulatory Overkill'

The Parliamentary Secretary to the Treasurer, Ross Cameron, today rejected Labor's CLERP 9 amendments as prescriptive, 'black letter' law, ill suited to the Australian regulatory environment.

"These amendments are regulatory overkill, largely borrowed from the US Sarbanes-Oxley Act. CLERP 9 fits Australia's flexible, principles-based approach to corporate governance centred on greater disclosure, accountability and shareholder participation," Mr Cameron said.

"Imposing unnecessary and prescriptive prohibitions on corporations will only have adverse consequences for shareholders and business.

Mr Cameron said "The ALP proposal to ban a company's auditor from providing certain non-audit services was inappropriate. The Sarbanes-Oxley Act does not contemplate that prohibited non audit services can never be provided by the auditor. There, the US Securities and Exchange Commission can provide exemptions to the prohibitions."

Mr Cameron also criticised the ALP amendment for a four year cooling off period before a former auditor can work for a former audit client as having the potential to shrink the pool of experts with accounting experience.

"Graduates could be reluctant to take up positions in accounting firms under these circumstances, forcing firms to bring in audit staff from overseas to keep up with demand for audit services. The unintended consequence of Labor's attempt to improve audit quality could be a decrease in audit quality."

Mr Cameron said "The Government had consulted extensively on CLERP 9 and it responds to the recommendations from the Ramsay Report and the HIH Royal Commission. It is a carefully considered package designed to improve the operation of the Australian market. Labor's last minute, prescriptive and unnecessary amendments would make the Bill unworkable."