Associations Incorporation Amendment (Transfer of Incorporation) Bill 2010

Extract from Hansard
[COUNCIL - Thursday, 25 November 2010]
p9565b-9578a
Hon Sue Ellery; Hon Lynn MacLaren; Hon Nick Goiran; Hon Norman Moore

ASSOCIATIONS INCORPORATION AMENDMENT (TRANSFER OF INCORPORATION) BILL 2010
Remaining Stages — Standing Orders Suspension— Motion

HON SUE ELLERY (South Metropolitan — Leader of the Opposition) [10.23 am] — without notice: I
move —
That so much of the standing order and temporary orders be suspended to enable the Associations
Incorporation Amendment (Transfer of Incorporation) Bill 2010 to proceed through all stages of this
day’s sitting.
By way of explanation, I indicate that this bill has been the subject of what could be described as some frenzied
lobbying recently. The government has agreed, through the relevant minister who has responsibility for the
Associations Incorporations Act, that it will support this matter being brought to a conclusion this week while
the house is in its scheduled sitting period. To give effect to that, this house will need to deal with the bill today
and send it to the other house. There are some amendments on the supplementary notice paper all of which, I
have been informed, have been agreed to by all respective parties. To give effect to that, I am seeking to suspend
standing orders because usually when a bill is subject to amendment, it would not proceed through all the
remaining stages in one day. That is the purpose of my motion.
Question put and passed with an absolute majority.
Second Reading
Resumed from 18 November.

HON LYNN MacLAREN (South Metropolitan) [10.25 am]: I support the Associations Incorporation
Amendment (Transfer of Incorporation) Bill 2010. The Greens (WA) had a very hasty briefing on this bill
yesterday. Although the government has a number of significant amendments to the original bill—the
Associations Incorporation Bill 2006—we can still throw our support behind the Associations Incorporation
Amendment (Transfer of Incorporation) Bill. I will draw the attention of the house to a couple of issues. We
recognise that sometimes Parliament should take quick action when a problem is discovered. That is definitely
the case in this situation. Also, it is important to not make piecemeal changes to acts. We note that the
government has flagged, at least in the public arena, that a larger and more comprehensive bill will be
introduced. We very much look forward to that. It has been a long time coming. A green bill was introduced by
the previous government in 2006 that was released for public consultation. We are aware of the changes
proposed by that green bill and we very much look forward to greater and more comprehensive changes being
made to the Associations Incorporation Act.

The bill before us will make some of those changes if we approve the amendments. I appreciate the fact that the
government advisers have worked very hurriedly to redraft Hon Sue Ellery’s bill and to link it to the future bill.
That is very important because we will not have to redo the work when the future bill finally comes before
Parliament.

I will talk about the content of the bill because that is all about the form and process. I understand that the bill
makes it possible for state organisations that are incorporated bodies to become corporations at the federal level.
That is really important because very small organisations in this state should have the opportunity to become
incorporated at the federal level. We also have large-scale organisations with many employees and a huge
turnover. Perhaps some other legislation might serve that group better. It is good that small organisations will
have the opportunity to become a corporation, if possible, and that the process to do that will be made easier. I
believe that previously the chamber had to approve each of the requests to change an organisation’s status. For
example, Parliament considered the HBF bill when that organisation was changed from an incorporated
association to a corporation. We do not want to have to deal with that level of detail. We would like to have a
system in place whereby if an organisation meets the criteria, it can easily and quickly change its status to be
covered by the different legislation. That is all good.

I particularly wanted to note a current issue in the Fremantle community related to an incorporated association,
about which members may be aware; it is in the media quite a bit. It was in fact subject to a Department of
Commerce investigation. I do not have the recent outcome of that investigation, but I know that the Wyola Club
was undergoing some scrutiny by the department. I hope that any changes that we make to the incorporations act
will deal with these kinds of problems much more efficiently in the future. This community has really struggled
to deal with the very complex matters of an associated incorporated body. I think our legislation may have, in
some ways, let that community down by not providing enough structure to deal with the problems that have
arisen. I do not know that we will be able to correct that in time for the good members of the Wyola Club to have
confidence that the system in place protects their rights as members of an incorporated association.

I look forward to the debate on the amendments and with those few words the Greens support this bill.

HON NICK GOIRAN (South Metropolitan) [10.31 am]: I rise to make some comments about the
Associations Incorporation Amendment (Transfer of Incorporation) Bill 2010. This bill, when introduced by the
Leader of the Opposition last Thursday, if I recall correctly, sparked my interest. The reason for that is I have—
like a number of other members in this place who are either doing so or have done so previously—served on
boards of voluntary or not-for-profit organisations. It is a very common circumstance in Western Australia that
those organisations, on whose boards we serve, are associations incorporated under the relevant act. Some
members also serve on the boards of not-for-profit companies. Once again, some members, if not serving in that
capacity currently—in the lack of free time that members of this profession have!—may have done so
previously. As soon as I saw the bill in question, my interest was sparked.

This is a refreshing change in the use of non-government business time, in this place. We often have motions
before us; I think they were formerly referred to as urgency motions. For what it is worth, and for the benefit of
those members on the committee looking at the standing orders, in the few months that I have been in this place I
have found that to be a fairly non-eventful procedure and circumstance given that those urgency motions never
come on for a vote. Today, we have the benefit of dealing with something that the Leader of the Opposition is
passionate enough about to have obviously taken the time and effort to understand the implications of this
legislation; obviously so much so that she has instructed the drafters to put something together for consideration
by the house.

I will address some concerns that I have about the legislation before us, and I note with interest that the
government is proposing some amendments that will be dealt with in the committee phase. I have those concerns
because, with the greatest of respect to the Leader of the Opposition, the second reading speech probably
provides more questions than answers. I will give a few examples of what I am referring to.

In her second reading speech on this bill last week, the Leader of the Opposition referred to some comments that
Hon Lynn MacLaren has made. I wholeheartedly agree with the majority of Hon Lynn MacLaren’s comments
this morning; I think they were incredibly sensible. However, I have one concern, and it has been repeated by
Hon Lynn MacLaren, to do with the notion that somehow size matters when it comes to this issue. I refer in
particular to the comments made by the Leader of the Opposition last week when she obviously made reference
to the notion of transfers. She stated —

This transfer may be considered necessary due to the size and scope of the organisation and its activities
or because the organisation is compelled to transfer under the Corporations Act due to statute or
regulation.

The second portion of what the Leader of the Opposition said makes perfect sense; there would be circumstances
in which a statute or regulation might require an organisation to have a particular structure, and therefore I can
fully appreciate where the Leader of the Opposition is coming from on this issue. In fact, as we progress further
in the second reading speech, a particular example is referred to in the Medical Defence Association. However, I
admit that I do not understand this notion of size and scope and I am hopeful that the Leader of the Opposition
will be able to address that, preferably in her reply to the second reading stage or, if not then, during Committee
of the Whole. The question I am asking is: why would the size of an organisation necessitate the transfer from an
association to a company? I think it was Hon Lynn MacLaren who this morning said that it perhaps might have
to do with the size of the revenue being generated by the organisation, but I do not know that I agree with that.
Incorporated associations come in all different sizes in terms of the number of their members and the quantum of
the revenue that they generate. At this time, I fail to see—hopefully the Leader of the Opposition will enlighten
me—why the size of an organisation makes any difference. Clearly, some large organisations in Western
Australia are incorporated under the act, and none of them have ever approached me about this issue. In fact, to
the best of my knowledge, I have never been approached on this particular issue. Therefore, I find it strange at
this time and, as I have said, if it is that I am not aware of the reason I look forward to hearing what that reason
is.

The Leader of the Opposition then went on to say that it might have something to do with the scope of the
organisation. Again, I fail to see how that would have any relevance. Under current Western Australian
legislation, there is a set of criteria under which one can apply to be an incorporated association; those criteria
have something to do with the scope of the organisation in question. If an organisation has qualified to apply
under the relevant act, why then would its scope require it to move under the Corporations Act? It simply is a
point that I do not think has been made clear and that certainly has not been elaborated on in the Leader of the
Opposition’s second reading speech. No doubt, we can be enlightened further later this morning.

I also want to draw to the attention of members the notion that an organisation’s activities might be a reason for a
transfer. I am not sure that is logical, because the activities would have again been part of the consideration of
whether one applies to be an incorporated association. Organisations need to meet the criteria required under the
act in order to be incorporated; therefore, I am not clear why the activities would necessitate a transfer. Of
course, in the second reading speech given by Hon Sue Ellery, there is the notion that not only the size and scope
of the organisation matter, but also the size and scope of its activities. Certainly, that is how I read it, but perhaps
the honourable member will clarify that for us in due course.

I also noted that in the Leader of the Opposition’s second reading speech was a suggestion that there is some
ambiguity at present that prevents a transfer from taking place. It appears there is some common ground on that
because, as Hon Lynn MacLaren mentioned earlier this morning, a green bill was put out quite some time ago by
the former government, and clearly these types of issues are being contemplated in whatever bill might
ultimately come before the house. Therefore, it seems that there is some common ground in that area.

Nonetheless, it is interesting that it is ambiguous about whether this is possible. I will ask the Leader of the
Opposition at the Committee of the Whole stage what exactly that ambiguity is said to be that prevents transfers
from taking place at the moment because, as I will explain in a moment, it seems to me that there is another way
of going about this. In fact, it is the way that everybody else has to go about such things, but it seems that when it
comes to the Medical Defence Association, we want to make an exception; somehow it is a more special case
than any other incorporated association in Western Australia and should be given some kind of favourable
treatment. I have to say that I am not at all comfortable with that at this time, but I hope that the ongoing debate
this morning and discussion at the committee stage will help to clarify that for me.

I also noted that Hon Sue Ellery mentioned in her second reading speech that the Australian Prudential
Regulation Authority, which is more commonly referred to as APRA, seems to be in ongoing discussions with
the Medical Defence Association, but it is not exactly clear where those discussions are currently at. There was a
suggestion that there was a requirement for the medical indemnity insurer to become a non-operating holding
company. As I said, I will in a moment explain how that might be possible currently, in my humble opinion, but
it is not exactly clear whether that is still an ongoing requirement because Hon Sue Ellery used the phrase that
“APRA had originally required”, which seems to suggest that it is a historical requirement and perhaps not a
current requirement. That is further corroborated by the fact that Hon Sue Ellery indicated that further
discussions about that requirement were going on. Therefore, I am keen for the honourable member to provide
some further explanation on that point.

I ask the house to consider for a moment whether there are any stamp duty implications from this legislation. I
am not sure what the answer to that question is but, as I said, I know that the Leader of the Opposition is quite
passionate about this matter and has sought to bring this bill before the house; therefore, I am sure that she can
enlighten us on whether there will be any stamp duty implications in the notion put before us as compared with
the possible way forward that I will suggest in a moment.

Also, I am keen to know what prevents the organisation in question from establishing a company today, for
example, or in the very near future, and then proceeding to dissolve its current association. It is not clear at all
from the second reading speech why that is not a possibility. I am fairly confident it is something that will have
been contemplated by the organisation in question, but it is not clear what hurdles and impediments prevent an
organisation from doing that. As I said earlier, at present any other organisation that wanted to become a
company, so to speak, would have to set the company up and dissolve its current structure. Certainly, I can recall
in my former profession as an owner of a legal practice that at one point we ceased to operate as a partnership
and commenced operating as a trust. Of course, that is quite a different thing from transferring from an
incorporated association to a company; nevertheless, there are some similarities in the sense that one can do that.

Hon Helen Bullock: When you are talking about trusts, is that a unit trust?

Hon NICK GOIRAN: Yes. Therefore, I think there are some similarities in the sense that an organisation can
shut down its current structure and then, if we like, re-establish itself simultaneously. In my case, it was all done
at the same time and without any difficulties. However, I look forward to Hon Sue Ellery clarifying those things
for us at a later point.

I have some other queries that I want to put before the house because I want to give Hon Sue Ellery the
opportunity to take her second reading reply as an opportunity to address these matters. In particular, I am keen
to know from the honourable member about the situation in the other jurisdictions in Australia. There are a
number of obviously similar acts in Queensland, New South Wales, the ACT, Victoria, Tasmania, South
Australia and the Northern Territory. However, it is not clear to me whether those other states have a provision
for this type of transfer. Will we be the first to go into uncharted waters? I suspect not, but I have not had the
opportunity to consider that myself. No doubt the honourable member probably has and can therefore enlighten
us on that matter. I have had the opportunity to look at the South Australian legislation, and it does not appear
that it has such a provision in its act, although there is talk about amalgamations, which is interesting because, as
I understand it, that is part of the Medical Defence Association’s motivation. However, even if we had a

provision like that in Western Australia, I question whether it would be applicable, because it would require the
amalgamation of two incorporated associations, incorporated under the relevant state act. In other words, in
South Australia, both associations need to be incorporated under its act; notionally, anyway, we could not have a
Western Australian association amalgamating with a South Australian association.

Perhaps to conclude my remarks, because I know there is a keenness to progress this morning, I am also
interested to know just a bit more from the honourable member about what brings the urgency of this matter to
the attention of the house today. As Hon Lynn MacLaren indicated, clearly there is a process within government
at the moment that is looking at these types of issues. Hon Lynn MacLaren indicated that she had received a
briefing on that and it seemed to indicate, as I understand it, that these types of issues will be addressed in that
process, probably in the not too distant future. Nonetheless, as I understand it, we need to deal with this
immediately. It is not clear to me why that would possibly be the case, but I am sure Hon Sue Ellery will be able
to enlighten members on that.

Last but not least, I understand that there is some suggestion that the failure to pass this bill might lead to
significant detriment to the organisation in question and its members. Again, it is not clear to the house what that
detriment is said to be and what the particulars of it are. I conclude my remarks there and indicate that at this
point in time I certainly propose to support the second reading of this bill, particularly so we can have further
discussion in the committee stage.

HON NORMAN MOORE (Mining and Pastoral — Leader of the House) [10.50 am]: The government, as
we have already heard, is prepared to deal with the Associations Incorporation Amendment (Transfer of
Incorporation) Bill today. However, work has been done, and is continuing to be done, by the government to
draft amendments to the Associations Incorporation Act 1987. A cabinet decision has been made to approve the
drafting of a bill that would cover the issues raised here. However, the Australian Medical Association (WA) and
the opposition have advised the government that there are some issues of an urgent nature. Yesterday I received
an email from Mr Paul Boyatzis, the executive director of the Australian Medical Association, in which he
states —

Given the strategic importance of the transfer … it has now become almost critical that the amendments
proceed without delay. The NSW Company has been rumoured to be wanting to move quickly and
absorb the remaining Victorian and South Australian insurers which will leave MDAWA very
vulnerable.

This matter has been raised with both the government and the opposition. Initially, the government’s position
was that it would wait until the amendments to the act in its entirety were considered and, therefore, this matter
would not be dealt with as a one-off. We are prepared to proceed with the private member’s bill on the basis that
the opposition agrees to the amendments put forward by the government, which would make it more consistent
with previous work done on this piece of legislation by the government. I look forward to hearing some of the
Leader of the Opposition’s response to the matters raised by Hon Nick Goiran that are of concern to him.

In the part of the email that I quoted from Paul Boyatzis, reference is made to a rumour. I would be a bit loath to
run around and pass legislation of this nature in a hurry if it is based upon a rumour. It would be helpful for me
to know at least whether anything more than a rumour surrounds this particular matter. I am also advised that the
government is aware that it is the view of both the Medical Defence Association of WA and the AMA that the
failure to pass this bill this year could lead to serious detriment to these organisations and the interests of their
members. However, the government has not been provided with evidence that properly substantiates the extent
of the detriment and gives us a better understanding of the consequences of this legislation not being passed. As I
said, we are prepared to make an effort during private members’ time to deal with this bill.

Assuming that the Leader of the Opposition provides responses that are helpful to Hon Nick Goiran and accepts
the amendments that are on the notice paper, the government supports this bill.

HON SUE ELLERY (South Metropolitan — Leader of the Opposition) [10.54 am] — in reply: I thank
members for their contributions to the debate. I indicate for the record that the opposition supports the
amendments that are proposed by the government. The amendments are substantial; they rewrite every clause of
the Associations Incorporation Amendment (Transfer of Incorporation) Bill. Based on my discussions with other
members of the house, I have every reason to believe that it is the will of the house to pass this bill. If the bill is
passed, we will end up with an act that reflects the terminology, language and substance that the government
seeks in this legislation.

I am advised that the government has changed some of the bill’s structural components and its language through
amendments, to reflect the government’s intention on the broader piece of legislation referred to by both Hon
Lyn MacLaren and the Leader of the House. Based on what people have told me about the will of the house, it is
my understanding that we will end up with a piece of legislation that reflects the government’s will for how this
matter is dealt with. I make that point at the outset.

I am able to provide answers to certain questions raised by Hon Nick Goiran. I am not sure that I am able to
satisfy them all, nor to the level of detail that he seeks. Having made the first part of my comment about the
terms of this legislation ultimately being in the terms that the government is seeking as a consequence of the
amendments, I suggest that Hon Nick Goiran directs some of his questions to the minister. A staffer from the
minister’s office is available and he is sitting in the President’s gallery. I will endeavour to answer the questions
to the best of my ability, but I suspect the member, by virtue of being a member of the government, might be
able to get the answers to some of his questions a lot quicker than I can.

I turn to the specifics raised by each of the members. Hon Lyn MacLaren noted that a larger, more
comprehensive piece of legislation will be coming before the Parliament. The member also noted that an effect
of this piece of this legislation is that those associations that meet the criteria set out within the legislation will be
able to transfer between the two jurisdictions in a more timely fashion.

Hon Lyn MacLaren also raised the issue of the Wyola Club. As a member for the South Metropolitan Region, I
share her concerns about the conflict that has been going on in that particular organisation. However, nothing in
this legislation would fix those problems. Those problems do not go to an issue of transferring between
jurisdictions at all; they go to something much messier. I suspect those problems are much more to do with
human frailty than a legislative framework. Even if Hon Lynn MacLaren had wanted this piece of legislation to
deal with the issues in the Wyola Club in Fremantle, this is not the legislation that would fix those problems.

Hon Nick Goiran reflected on his own experience of being a board member of incorporated organisations,
associations and various not-for-profit companies. The first issue the member raised was, to use the parochial, a
wider-sized matter. The word “size” is not used in the legislation; the terminology used is “scale and nature”.

The member is right that the word “size” was used in my second reading speech.

The first point that I make is that the particular clauses are out of the Australian Capital Territory’s legislation
and therefore that language has already been applied. I cannot name the other jurisdictions as I am not in the
position to provide that information; when I sit at the committee table I will not be in a position to answer those
questions at that time either. It is certainly the case that the provisions come out of the ACT legislation.

However, it seems to me that the actual language of the legislation around “scale and nature” in some
circumstances will be as a direct result of functionality; that is, as a direct result of what the organisations
actually do. Some of those organisations are going to be larger than others. Some of those associations, like
MDA National, for example, will be relatively larger organisations as a consequence of their functionality. The
question first arose with the Australian Prudential Regulation Authority and the financial provisions relating to
the provision of indemnity, not just to medical practitioners but to a broader range of occupations. Some of it
relates to “why does size matter”, and will be as a consequence of the function of the organisation. In this case,
the function of the organisation drew some attention under the APRA provisions, and I will come to the second
point that Hon Nick Goiran made on APRA in a minute while I am on that point. Hon Nick Goiran raised the
issue that the second reading speech set out, if one likes, the original question that was about the prudential
regime. This matter has some history, in the sense that it is something that was dealt with by at least two but
possibly three ministers under the previous government and two ministers under this government. The advice to
the MDA about the legal position under APRA’s requirements varied. The advice from APRA was different
from the advice from respective legal advisers within the department on whether there was a question of
ambiguity surrounding it.

Hon Nick Goiran: You are not suggesting that lawyers tend to disagree with each other?

Hon SUE ELLERY: Yes, I am. In fact, I am suggesting that nobody could provide a definitive answer within a
relatively short time saying, “No, we think that is wrong. We think it is this.” The AMA sought some certainty.
Hon Nick Goiran is right to question whether the original question that arose on the prudential provisions is still
the motivation. It raised the question, but, in my recollection, out of at least two ministers in our government and
two ministers in this government, nobody was able to provide any certainty as to whether any questions
remained on that matter. Hon Nick Goiran asked where the discussions are at with APRA. I am not able to
answer that question specifically. I know that the APRA question raised one issue, and it seems to me that over a
period of probably four years and maybe a bit longer, a whole bunch of other questions have been raised that go
to a lack of certainty. The honourable member asked about stamp duty and he also raised the notion of whether
there are obstacles to an association dissolving itself and then re-forming itself and using that as a mechanism to
get around the issue. The advice I have been given is that in this connection, if an association was to fold and
then re-form, there is a risk surrounding stamp duty and it relates to whether the organisation continues to
provide service. This bill explicitly allows for all legal and financial obligations to transfer to the new entity.

Hon Nick Goiran: Is that satisfactory?

Hon SUE ELLERY: That is a question for the house to decide, and the member will have to make his own
judgement on that. As to whether this piece of legislation of itself will generate some stamp duty obligations, the
advice I have is that it will not; in fact, it enables all the financial and legal obligations to transfer, and thus the
organisation would not incur stamp duty obligations.

The other issue that Hon Nick Goiran raised, which I have canvassed, was what is the obstacle to the
organisation dissolving itself and re-forming, and I am advised there are stamp duty consequences of that. The
final question the member asked related to other jurisdictions. I can advise the member about the situation in the
Australian Capital Territory. I cannot provide the member advice on other jurisdictions, and I suggest the
member might be able to get that advice from the minister’s office. I think that covered all the matters that Hon
Nick Goiran raised.

On the issues raised by the Leader of the House, he is quite right that there is a substantive bill to come before us
which has been some time in its gestation and which will cover a range of matters. The Leader of the House read
out an email he received from Mr Paul Boyatzis of the AMA yesterday. That advice has been put to the
opposition on numerous occasions over a relatively long time and it is that which motivated us to bring this bill
before the house. I will make the point that it was my expectation, because amendments were before the house,
that we would not be able to proceed to all stages unless the house agreed, obviously, to suspend standing orders
to allow that to happen. On the issue raised by the AMA, I am pleased that the government agreed to that, but it
was not something I was ever going to be able to deliver to the AMA by myself. Therefore, it is as a
consequence of the government’s agreement to that request that we will proceed through all stages.

Hon Norman Moore: Do you think they would ever be happy with anything anybody did?

Hon SUE ELLERY: That is quite a provocative question from the Leader of the House, and I certainly will not
be answering it on the record.

The Leader of the House asked whether the opposition supports the amendments. Yes, we do. Members will
note, when they look at the supplementary notice paper, that in effect the amendments will rewrite each of the
respective clauses of the bill. What we will end up with is what I stated at the beginning of my reply, that is, a
piece of legislation that reflects the government’s wishes for how this matter is expressed—we will get to
whether there are any additional matters in due course, but the amendments add appeal provisions in respect of
the State Administrative Tribunal—so we will end up with a better piece of legislation than that which originally
came before the house. The opposition is pleased with those amendments and they will satisfy the MDA and the
AMA, and I am advised they will be consistent ultimately with the bill that will come before the house to address
a range of broader issues on the incorporations legislation in Western Australia.

With those comments, I thank members again for their contributions and I commend the bill to the house.

Question put and passed.

Bill read a second time.
Committee
The Deputy Chairman of Committees (Hon Max Trenorden) in the chair; Hon Sue Ellery (Leader of the
Opposition) in charge of the bill.
Clause 1: Short title —

Hon LYNN MacLAREN: I noted that the issue of MDA National came up during the second reading debate. I
felt that in speaking to clause 1, I could add a bit more information for the benefit of members who are
considering this important bill. MDA National is a mutual medical defence organisation. It was founded in Perth
in 1925 to protect the interests of its doctor members. MDA National owns medical indemnity insurer MII. This
company has issued professional indemnity insurance policies to members of MDA National since July 2003.
Together the two entities make up the MDA National group. The MDA National group achieved a net surplus of
$26.7 million, up from $3.1 million the year before, according to the MDA’s annual report of 2009–10. Premium
and subscription income has increased from the previous year by 12 per cent to $60.6 million. As mentioned, the
MDA and the Australian Medical Association are seeking amendments to the Associations Incorporation Act
1987 to enable the transition of MDA National from an incorporated association to a company under the
commonwealth Corporations Act. MDA National has been pursuing this since at least 2003 as it believes its
status as an unincorporated association puts it at a competitive disadvantage in the industry. The alternative is a
transfer of operations interstate, with negative consequences for both employees and WA revenue.

In that light, I believe we should proceed with the clauses of the bill. I think it is very important that members are
aware of the context of the bill. The organisation has asked for this. I will reiterate that we think this is a good
way forward, even though it can be perceived as a piecemeal approach. We think that the government’s
amendments have much improved it. It is the business of this Parliament to legislate for citizens of Western
Australia. I think these citizens will welcome this new legislation.

Hon NICK GOIRAN: I still have concerns. I thank the Leader of the Opposition for endeavouring to answer
my questions. In particular, it was helpful for the Leader of the Opposition to note that the amendments that are
being proposed by the government at later stages include the same type of language that is before us in this bill.
In particular, I am referring to the notion of size, scale, value and so forth. I take that point on board.
Nonetheless, it does not mean that that choice of language is ideal. I still do not grasp why the scale of an
organisation would mean that it would need to be incorporated. As I said in my speech on the second reading, I
completely understand the notion about the regulatory framework. That makes perfect sense. Just because an
organisation starts out small—for example, a small sporting club becomes a big sporting club—why does that
mean it needs to become a company? That is no criteria whatsoever. The regulatory criterion is fair enough.

Obviously we will get to that in due course when we talk about clause 5. The language in that clause talks about
the scale or nature of the activities. It is not clear to me why that is an issue, along with the value or nature of the
property or the extent or nature of the dealings. If an organisation is so large in scale or the value or nature of the
property is presumably relevant, why is it an incorporated association in the first place? I am keen for the Leader
of the Opposition to help me with this matter. Why does scale or value really matter? Is it really just an issue of
the regulatory framework?

Hon SUE ELLERY: I am not sure that I will be able to take the answer much beyond that which I gave in my
second reading reply. None of the provisions in the bill before us make it mandatory, so it is not the case that just
because an organisation gets to a certain size, it is required to transfer into another jurisdiction. That is not what
the bill sets out to do at all. It sets out a set of criteria, which, given the circumstances that need to be taken into
consideration, may well form part of the reason why an organisation may seek to transfer jurisdictions.

Let us think about some of the non-government organisations, for example, in my portfolio area. An organisation
might start up as a small niche organisation providing, for example, emergency relief in a particular suburb. I am
thinking of an organisation such as Granny Spears Community House in the northern suburbs, which started off
as a small organisation offering emergency relief when I was working in the northern suburbs in the 1980s. That
organisation runs a range of social programs. It is a pretty big organisation now. It has a pretty big turnover.

There are a bunch of organisations such as that, not just in the jurisdiction that I deal with, in which an
organisation may grow over time. Over time its circumstances, scope and functionality may change and it may
be that as a consequence of those things, it is appropriate for it to transfer. It is not compulsory. There is nothing
that says once an organisation gets to size X, it must transfer. It is one of the factors that may well motivate an
organisation to seek to transfer or motivate the minister or the commissioner to suggest that the organisation may
want to transfer. It is one of the factors that would be taken into account. It will always be connected to the
circumstances that apply to that organisation at that point. I am not sure that I can provide much more
information than that.

Hon NICK GOIRAN: I thank the Leader of the Opposition for that explanation, even though I am not satisfied
with it. I accept that the Leader of the Opposition is assisting the house in the best way possible. I agree with
what the Leader of the Opposition has said but I do not think it should be a factor that is taken into account. If I
am not mistaken, the commissioner will ultimately decide whether the organisation is large scale. Who cares? I
am saying that that should not be the reason. I do not think the commissioner should be granted jurisdiction to
contemplate that. Perhaps I could explore that further. The example given by the Leader of the Opposition of an
organisation that starts out particularly small and so forth was a good one. If the motivation for all of this at the
end of the day is for the MDA to escape stamp duty, I do not know whether I am comfortable with that. The
Leader of the Opposition gave the example of a small organisation that provides emergency relief to the citizens
of Western Australia. We do not want to impose an unhelpful tax on such an organisation when it is really
providing a service to the community. In my opinion—other members may disagree—that is not what I think of
when I think of the Medical Defence Association. Like a number of other insurers, one of the primary roles of
the MDA is to assist and indemnify medical practitioners in the event that they are sued. The question that I have
for the house—perhaps the Leader of the Opposition can express her view on this—is: why would an
organisation such as that, to use the terminology that is floating around about the size, the scale and value of its
activities and so on and so forth, escape stamp duty? I am not clear on why that would be the case. Yes, if a
small organisation such as a small sporting club wanted to become a company for whatever reason—I cannot
imagine why it would want to become a company—absolutely. But the very fact that an organisation has gotten
to the point of contemplating becoming a company tells us that it is a significant ongoing concern. This is not a
small organisation by any stretch of the imagination, so if it is so large in scale and value and so forth, should it
not make some contribution to the state of Western Australia?

Hon SUE ELLERY: I guess that to a certain extent it is a rhetorical question; it goes in part, perhaps, to the
policy of the Associations Incorporation Amendment (Transfer of Incorporation) Bill 2010—the member will
have to make his own judgement on that. I have nothing further to add about the specific provisions of the bill,
and, ultimately, the member will make his own judgement about whether he supports the bill if he thinks that is
part of its effect.

Hon LYNN MacLAREN: Perhaps the Leader of the Opposition could clarify something for me once again; I
thought I heard it pretty clearly, but perhaps she could make it a bit clearer. It is my understanding that the
Associations Incorporation Amendment (Transfer of Incorporation) Bill 2010 will allow associations to change
status with less administrative and financial burden; surely that will be a good outcome of this legislation. I
cannot see anything in this legislation that is compulsory or mandatory; organisations can opt to do it if they feel
it is important to change their status. The provisions that allow the commissioner to initiate that change are
protected by the ability to seek a State Administrative Tribunal review. So not only have we got a system that
organisations can choose to participate in, but they can also decide whether it is good for them to change their
status. It will reduce costs and red tape, and it also provides access to the tried and tested SAT appeal mechanism so that everybody’s interests can be weighed up in the event that somebody thinks the decision was wrong.

Leader of the Opposition, is there anything in this bill that makes it compulsory?

Hon SUE ELLERY: I have made the point already—I will make it for a third time—no.

Hon NICK GOIRAN: My final point on this issue is that, really, the answers given have not been satisfactory.
It has not been explained to the house why an organisation, when it gets to a certain scale and value, should
escape stamp duty. We have not had that question answered, and the best answer we have had is that it is a
philosophical issue for the house.

Hon Sue Ellery: No; it is a policy matter determined when we have the second reading vote, which we have.

Hon NICK GOIRAN: Sure. I am just observing that the language used in the bill and the amendments refer to
size, value and nature, all of which have stamp duty implications, but we have not had a satisfactory answer to
that. But, as I said earlier, I acknowledge that the Leader of the Opposition is doing the very best she can in these
circumstances. Apart from the stamp duty issue, it very much troubles me that the Leader of the Opposition is
saying that she is not actually sure what the current status of the discussions are between the Australian
Prudential Regulation Authority and MDA National Insurance. My reading of it is that if that is no longer an
issue, why are we dealing with this? As the Leader of the House said, it appears that this is all in relation to some
kind of rumour and some kind of competition between two organisations, one based in New South Wales and
one based in Western Australia. If it is the case that APRA no longer requires MDA to become a company and
we made those inquiries and that was the answer, would the Leader of the House still be bringing this matter to
the house?

Hon SUE ELLERY: The honourable member did specifically ask me on a couple of occasions during the
course of my second reading reply if I would provide him with a reply to the issues he raised during his
contribution to the second reading debate, which I did. I addressed this very issue that he raised with me and
provided a response in my second reading response. I am not going to repeat what I said then, but what that went
to was, there was initially an issue raised by APRA over a period of about four years—it may have been
longer—and certainly two ministers, maybe three, when we were in government, and two ministers since this
government has been in place, have said that a range of legal ambiguities have been raised. This piece of
legislation seeks to provide some certainty. The original question of ambiguity was raised by APRA, and,
subsequent to that, a range of different legal opinions have been provided, which suggests that some ambiguity
remains. I gave that answer to the member during my second reading reply, and I cannot add any more.
Hon NICK GOIRAN: That is fine, and I acknowledge that the Leader of the Opposition responded in the way
she has just reiterated, but, nonetheless, the question has not been answered. The question is: is it a live issue
today? The response we have received is, “We don’t know.” That is fine; I accept that response. However, I am
saying to the house that if it was not a live issue today—we do not know the answer to that; it would be good to
know the answer but we do not—would this still be before the house today? Would we be under this pressure, on
the last sitting day of the year, to be putting this through? I suspect not. I think members need to be cognisant of
the fact that we are passing a piece of legislation today on the basis of something we do not know. I put to the
members of the house that that is pretty unsatisfactory. That is the only observation I make, Leader of the
Opposition.
Hon NORMAN MOORE: I acknowledge the comments made by my colleague Hon Nick Goiran, but I make
this point on behalf of the government: the government has sufficient concern about this matter to want this to
proceed, albeit it may be a rumour or some substantiated fact—nobody quite knows. On the basis of the
submissions made by the Australian Medical Association, the minister responsible for this legislation has taken
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the view that we should pass this legislation to avoid a situation that may or may not eventuate—it is probably
belts and braces legislation, if the truth be known. I think we can probably move on.
Clause put and passed.
Clauses 2 and 3 put and passed.
Clause 4: Section 3A amended —
Hon NORMAN MOORE: I move —
Page 2, lines 16 to 19 — To delete the lines and insert —
(ca) provisions that relate to registration as a company under the Corporations Act Chapter
5B to the extent that an incorporated association is authorised or required under Part
IIIA to become registered as a company under that Chapter; or
Basically this is to reflect the further amendment that the government is moving in respect of clause 5, to change
the reference to the particular part, which is now part IIIA, and to rewrite that in slightly different language.
Hon SUE ELLERY: If I may be so bold, I wish to make some comments about the package of amendments
before the house. As the Leader of the House has indicated, most of the amendments go to ensuring that this
legislation matches what the government intends will come before the house as to the outcome of the broader
review of the parent legislation. Some of the amendments go to language and some go to numbering.
Hon Norman Moore: I propose to go through the reasons for changing part IV.
Hon SUE ELLERY: This is the first of those. Some of the amendments before us will seek to delete certain
clauses and insert others. I am sure that the Leader of the House will spell out the reasons for each of them. What
I am indicating is that we will be accepting all of the amendments on the basis that they either go to matters that
go to formatting language or numbering in respect of the parent legislation, or they in fact make improvements;
for example, the appeal mechanisms and various others. I will give a general statement now that we will be
supporting all of the amendments for those reasons.
Amendment put and passed.
Clause, as amended, put and passed.
Clause 5: Part VIA inserted —
Hon NORMAN MOORE: The government intends to vote against clause 5 so that we can bring in a
new clause 5 subsequent to that happening. I ask the house to vote against clause 5.
Clause put and negatived.
New clause 5 —
Hon NORMAN MOORE: I move —
Page 2, after line 24 — To insert —
5. Part IIIA inserted
After Part II insert:
Part IIIA — Transfer of incorporation
10A. Terms used
In this Part —
Corporations Act means the Corporations Act 2001 (Commonwealth);
prescribed body corporate means —
(a) a company within the meaning of the Corporations Act that is taken to be registered
in Western Australia; or
(b) an entity that is a body corporate under —
(i) another Commonwealth Act; or
(ii) a written law other than this Act,
and is prescribed for the purposes of this definition.
10B. Incorporated association may apply for incorporation under another law
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(1) An incorporated association may by special resolution decide to apply for registration
or incorporation as a prescribed body corporate and, subject to this section, the
association is authorised to give effect to that decision.
(2) An incorporated association cannot make the application for registration or
incorporation unless the Commissioner has, on application made to the Commissioner
by the association, approved —
(a) the application being made; and
(b) the doing of the things that are reasonably necessary to obtain the
registration or incorporation.
(3) An application made to the Commissioner under subsection (2) must —
(a) be in a form approved by the Commissioner; and
(b) include a copy of the special resolution referred to in subsection (1); and
(c) include any information required by the regulations; and
(d) specify the period within which the application for registration or
incorporation is expected to be made; and
(e) be accompanied by the fee prescribed.
(4) The Commissioner is to approve an application for registration or incorporation being
made if satisfied that the continued incorporation of the association under this Act
would for any reason be inappropriate, including —
(a) on account of the incorporated association having, in the opinion of the
Commissioner, ceased to be eligible to be incorporated under this Act; or
(b) because of —
(i) the scale or nature of the activities of the incorporated association;
or
(ii) the value or nature of the property of the incorporated association;
or
(iii) the extent or nature of the dealings which the incorporated
association has with the public,
as determined by the Commissioner; or
(c) because any prescribed circumstances exist.
(5) An incorporated association —
(a) in making an application for registration or incorporation; and
(b) in doing the things that are reasonably necessary to obtain it,
must act in accordance with the terms and conditions of the Commissioner’s
approval.
10C. Review of decision to refuse application
(1) If the Commissioner refuses an application made to the Commissioner under
section 10B(2) by an incorporated association, the association may apply to the State
Administrative Tribunal for a review of the decision.
(2) An application under subsection (1) must be made within —
(a) 28 days; or
(b) such other period as is prescribed,
after the incorporated association receives notice of the refusal.
10D. Commissioner may direct an incorporated association to apply for incorporation
under another law
(1) This section applies if the Commissioner is satisfied that the continued incorporation
of an association under this Act would for any reason be inappropriate, including —
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(a) on account of the incorporated association having, in the opinion of the
Commissioner, ceased to be eligible to be incorporated under this Act; or
(b) because of —
(i) the scale or nature of the activities of the incorporated association;
or
(ii) the value or nature of the property of the incorporated association;
or
(iii) the extent or nature of the dealings which the incorporated
association has with the public,
as determined by the Commissioner; or
(c) because any prescribed circumstances exist.
(2) The Commissioner may in writing direct the incorporated association to apply for,
and do all things that are reasonably necessary to obtain, registration or incorporation
as a prescribed body corporate.
(3) A direction under subsection (2) —
(a) must specify the period within which the application is to be made; and
(b) may specify any terms and conditions that are to be observed in making the
application for registration or incorporation or doing the things that are
reasonably necessary to obtain it.
(4) The Commissioner may, by notice in writing to the incorporated association —
(a) from time to time extend the period referred to in subsection (3)(a); or
(b) revoke or amend a direction given under subsection (2).
10E. Commissioner to give notice of intention
(1) Before the Commissioner gives a direction to an incorporated association under
section 10D(2) or notice of an amendment under section 10D(4)(b), the
Commissioner must give notice in writing to the association stating —
(a) the Commissioner’s intention to give the direction or make the amendment;
and
(b) the grounds on which the Commissioner is proposing to act; and
(c) that written submissions on the proposed direction or amendment may be
made to the Commissioner within a specified period.
(2) The period specified under subsection (1)(c) is not to be less than 90 days after the
notice is given but the Commissioner may, on application made by the association,
extend the specified period for a further period not exceeding 90 days.
(3) Before the Commissioner gives or amends a direction to an incorporated association
under section 10D, the Commissioner must have regard to any submission made by
the association in accordance with the notice.
10F. Review of proposed direction or amendment
(1) An incorporated association to which a notice is given under section 10E may, not
later than the end of the period specified under section 10E(1)(c) or any extension of
that period, apply to the State Administrative Tribunal for a review of the proposed
direction or amendment.
(2) If an application is so made, the Commissioner cannot give the direction or make the
amendment unless —
(a) the application results in the Commissioner’s proposed action being
confirmed; or
(b) the application is dismissed or struck out.
10G. Association to comply with direction
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(1) Subject to section 10F, an incorporated association must comply with a direction
given to the association under section 10D(2) or a direction as amended under
section 10D(4)(b).
(2) A contract to which an incorporated association is a party is not illegal, void or
unenforceable by reason only of a failure by the association to comply with a
direction or notice under section 10D.
10H. Cancellation of incorporation under this Act
(1) The registration or incorporation of an incorporated association as a prescribed body
corporate automatically cancels the incorporation of the association under this Act.
(2) Where an incorporated association becomes registered or incorporated as a prescribed
body corporate, the body must notify the Commissioner in writing of the registration
or incorporation within 14 days after it occurs.
Penalty: a fine of $5 000.
10I. Provisions about the transition to incorporation under another law
(1) In this section, a reference to a transfer of incorporation by an incorporated
association is a reference to an incorporated association becoming registered or
incorporated as a prescribed body corporate (the body corporate).
(2) The transfer of incorporation by an incorporated association does not affect —
(a) the identity of the association which is to be taken to be the same body
before and after the transfer of incorporation; or
(b) any act, matter or thing done or omitted to be done, or any circumstance
subsisting, before the transfer to the extent that the act, matter, thing,
omission or circumstance has any relevance to the association after the
transfer.
(3) Without limiting subsection (2) —
(a) proceedings by or against an incorporated association subsisting immediately
before the transfer of incorporation may be continued by or against the body
corporate in the name of the incorporated association; and
(b) proceedings that might have been brought by or against an incorporated
association immediately before the transfer of incorporation may be
commenced by or against the body corporate.
(4) Without limiting subsection (2), a transfer of incorporation does not affect —
(a) any obligation or liability incurred under this Act; or
(b) any penalty or forfeiture incurred in respect of any offence committed
against this Act; or
(c) any investigation, proceeding or remedy in respect of any such obligation,
liability, penalty or forfeiture,
and any such investigation, proceeding or remedy may be instituted, continued or
enforced and any such penalty or forfeiture may be imposed as if section 10H had not
been enacted.
(5) This section has effect in relation to a matter concerning an incorporated association
that is registered as a company under the Corporations Act only to the extent that the
matter is not dealt with by that Act.
New clause 5 will replace the proposed part VIA “Transfer of incorporation” contained in the private member’s
bill. For the sake of time, rather than provide an explanation on each clause, I seek permission to go through the
whole explanation as to what the new clause 5 contains and why the government sees it as being necessary. It
will highlight some of the inconsistencies and problems associated with what is contained in the private
member’s bill.
It is the government’s view that a number of provisions in the bill are internally inconsistent, and inconsistent
with the current Associations Incorporation Act 1987 and the government’s own bill, which is being drafted at
the present time to amend the act. In relation to the scope of the proposed amendments, the bill contains narrow
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provisions that authorise the transfer requirements of Medical Defence Association of Western Australia Inc.
The bill provides that associations may voluntarily apply to the Minister for Commerce for permission to transfer
their incorporation from an association under the act only to a company registered under chapter 5B of the
Corporations Act. The proposed amendments I have moved to the bill contain provisions to achieve the
MDAWA’s requirements and, in addition, provide for both voluntary and commissioner-directed transfers of
incorporation. They also provide for a wider choice of jurisdictions for transfers of incorporation, either to a
company, within the meaning of the Corporations Act, registered in Western Australia or an entity that is a body
corporate under a written law other than the act, or an entity that is a body corporate under another
commonwealth law.
In respect of the internal inconsistencies within the bill, the bill includes sections 35(3) to 35(5) of the current act
which relate to the commissioner’s cancellation powers and functions under the act. The retention of these
sections conflicts with the earlier provisions of the bill that give the minister the discretion to cancel the
association’s incorporation. The bill introduces a new provision to provide the minister with the discretion to
approve an arrangement that will preserve the association’s incorporation under the act. There is no definition of
“arrangement” to indicate its meaning or whether it will conflict with the existing provisions of the act and
amending bill. When I say “amending bill” I mean the bill that the government is currently contemplating. It is
also unclear whether this inclusion may result in a new category of provisional incorporation. The proposed
amendments to the bill will remove these internal inconsistencies.
In the government’s view there are some inconsistencies between the bill and the act, and what the government
proposes to do in its new amended version of the act. The first relates to approvals of transfers. The bill before
the house provides that permission for transfers of incorporation “must” be given by the minister, provided an
application for transfer is in the correct form. This is inconsistent with the intent of the act. The government’s
amending bill will allow the current decision-maker, which is the commissioner, the discretion to either approve
or refuse an association’s application for transfer, with a right of review provided to the applicant. Further, the
proposed amendments to the bill provide an association with procedural fairness in the form of a right of review
of the commissioner’s decision to refuse an application for transfer of incorporation.
In respect to cancellation of incorporation, under the member’s bill the minister may cancel an association’s
incorporation on certain grounds, upon which it is no longer appropriate for an association to operate under the
act, by first giving notice of the proposed cancellation; whereas under the act and the government’s amending
bill, the commissioner is provided with this discretion. The bill fails to afford an association procedural fairness
by excluding a right to review the minister’s decision to cancel an association’s incorporation. Under the
proposed amendments to the bill, and in the act, a right of review of the commissioner’s decision is available in
that circumstance.
Finally, in respect to efficient and accountable decision-making: under the current act and the government’s
amending bill—that is, the proposed amendments we will bring in next year—the minister has no role in the
process of incorporating an association, in monitoring its compliance with the act or in decision-making for a
transfer of incorporation. These functions are administrative and operational, and the Parliament has accordingly
assigned them to be performed by the commissioner. This is consistent with a strong trend in legislation in recent
years to remove ministers from matters of operational decision-making in order to reduce their administrative
burden, improve efficiency and timeliness in government approval processes, and enable ministers to focus on
strategic issues of government. The bill reverses this direction by restoring some operational decision-making to
the minister. The bill will create further inconsistencies by providing two decision makers—the minister and the
commissioner—with different powers to deal essentially with the same issues; that is, transfers and cancellations
of incorporation.
The bill does not subject the proposed decision-making role of the minister to review by the State Administrative
Tribunal, contrary to the broad trend in recent years for decisions made using statutory powers to be transparent
and independently reviewable. It is our view that the rewrite we have provided, which is to be new part IIIA, will
deal with those issues that the government has determined are problems with the bill as moved by the member.
If the house is agreeable, I think that probably explains all the issues that are contained within the amendment.
Rather than me giving an explanation to each clause as we go through new part IIIA, I hope that might cover the
issues raised by the government that have encouraged us to the view that we should amend the private member’s
bill to make it a better piece of legislation. Should the house agree to that, we will go along with the third
reading.
New clause put and passed.
Clause 6: Section 36 amended —
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Hon NORMAN MOORE: It is the government’s view that we should oppose clause 6. It is a general purpose
section to give effect to the above if not covered by the Corporations Act. It is not required under the legislation,
so I would ask the house to vote against it.
Clause put and negatived.
Title put and passed.
Report
Bill reported, with amendments, and the report adopted.
Third Reading
Bill read a third time, on motion by Hon Sue Ellery (Leader of the Opposition), and transmitted to the
Assembly.