Public Trustee Corporation Bill

The Hon. J. W. SHAW (Attorney General, Minister for Industrial Relations, and Minister for Fair Trading) [8.15 p.m.]: I move:

That this bill be now read a second time.

I refer honourable members to the second reading speech I made on an earlier occasion.

The Hon. J. P. HANNAFORD (Leader of the Opposition) [8.15 p.m.]: This bill has been before the House previously. On that occasion I indicated that the Opposition would for various reasons oppose the bill. Whilst it is believed that there are reasons for improving the efficient operations of the Public Trustee, this proposed corporatisation is about extracting millions of dollars from the Common Fund. As I have said before, this issue is driven not necessarily by the Attorney General but by the demands of Treasury. Treasury has maintained the view that cross-subsidisation of the cost of this system for the benefit of the poor has been administered successfully by the Public Trustee. The office of the Public Trustee was established for the benefit of the poor and people with small estates. The Government wants us to accept that it will as a community service order provide millions of dollars to ensure the successful continued operations of that system.

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I recall this view being advanced solidly when I was Attorney General. No-one was ever able to satisfy me that Treasury would gratuitously make millions of dollars available to the Public Trustee in order that he could maintain services for the poor. In discussions with me Treasury pointed out that the office of the Public Trustee as a corporatised organisation would be required to contribute a dividend and that such contribution would be a profit in an organisation competing on a level playing field with other trustee companies. It was indicated that once the dividend was taken by Treasury the same amount would most probably be paid back to the Public Trustee. At that time I took the view that this was male bovine excreta, and my view has not changed since. I recognise that there are ways in which efficiencies may be improved, but I stress that the office of the Public Trustee exists for the benefit of the poor and that function should be sustained.

There are areas in which corporatisation is appropriate, and this may be one of them. Perhaps corporatisation could be pursued otherwise than by way of what is effectively a profit-making venture for Treasury. For the reasons that I outlined in some detail previously, the Opposition will oppose the bill and seek a division on its second reading. If the bill is passed through the second reading stage, I will at the Committee stage move amendments relating to the Common Fund. I remember receiving a letter from the trade union movement when at the instigation of Treasury I as Attorney General sought to pursue some corporatisation of the office of the Public Trustee.

If my recollection serves me correctly, that letter was signed by Peter Sams, who very strongly expressed his opposition to what was proposed and indicated the action he would take if I pursued that process. Whilst no letter was received from Peter Sams on this occasion, the Public Service Association has strongly expressed its opposition to this proposal. I am pleased that the PSA has expressed its opposition to the legislation. At a recent function I said to Mr Sams that I hoped the PSA had maintained the principles it had when I was forced to look at the matter by Treasury. I hope that the Attorney General is forced not just to look at it but to pursue it by Treasury.

The Hon. R. S. L. Jones: Treasury hasn’t changed.

The Hon. J. P. HANNAFORD: Treasurers change; the Treasury does not.

The Hon. R. S. L. Jones: You weren't conned?

The Hon. J. P. HANNAFORD: I do not know whether the Attorney General has been conned. He knows what he is doing and what he has to do. Sometimes Attorneys have to do what Attorneys have to do. I am pleased that the PSA has maintained its opposition as a matter of principle to this matter. I look forward to being Attorney General after March next year, when Treasury will try to do the exact same thing to me. I hope the PSA will give me the same support it is giving me now.

The Hon. I. COHEN [8.23 p.m.]: The Greens strongly oppose this bill in its present form. It has had a chequered history. The bill was introduced into the Legislative Council on 30 June 1997. According to Matthew Russell, a reporter from the Sydney Morning Herald, its introduction came seven days after the Public Accounts Committee - PAC - criticised Treasury for not issuing a green paper to open the matter up for public discussion. The bill was withdrawn after the PAC repeated its call for the corporatisation process to be made public and the Hon. R. S. L. Jones moved a motion to have it deferred. A green paper was subsequently produced by the Government. However, the bill has not been amended as a result of the green paper.

The Hon. R. S. L. Jones: It was all a farce.

The Hon. I. COHEN: Indeed. As a result, the Greens oppose this bill. The bill proposes to corporatise the office of the Public Trustee. The Greens consider that corporatisation is usually the first step towards privatisation and the Greens are fundamentally opposed to privatisation - in this House we have at least been consistent. It is a pity that the Treasurer is not present in the House to discuss the type of economic activity that is fundamental to the workings of government. The Greens would like the bill to be amended to ensure that the office of the Public Trustee can never be privatised. The Greens sought that amendment but understand that privatisation may occur in the next term of Parliament.

However, the Greens are also concerned that the moneys released through the process go to a social benefit and, unfortunately, we are not convinced of that. A major issue to surface regarding the bill is the $35 million held in the Public Trustee interest expense account from undistributed income that has been retained by the Public Trustee. By corporatising the office of the Public Trustee the Government believes it has the right to appropriate $35 million of the $80 million held in the account. The Law Society and the New South Wales Council of Social Services - NCOSS - have written to our office regarding the bill. The Law Society stated:

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The essential purpose of the establishment of the office of the Public Trustee was the furtherance of the public good. It is in this vein that the Public Trustee has serviced the particular needs of lesser privileged members of the community with allowance for their particular needs and circumstances. I view with some disquiet the absence in the Green Paper of a firm and express commitment to this important principle of underprivileged community service, other than the statement that "the service to the traditional clients of the Public Trustee will be preserved". However, the existing obligation cited in paragraph 2.1.5 of the Green Paper has not been repeated.

Additional matters of concern lie in the proposed appropriation by the Government of (1) the surplus which has accrued after distributing interest payable on funds accumulated from year to year and set aside for corporate planning arising from paragraph 3.2.4 of the Green Paper, effectively stripping the capital reserves from the monies to be made available to the new Corporation, and (2) moneys set aside in a special interest expense account from undistributed income over many years. The latter proposal pays no regard to the fiduciary nature of such holdings and the equitable duty of the Trustee to identify and account to each beneficiary for his/her entitlement regardless of the provisions of Section 36A(5) of the present Act.

In an article in the Sydney Morning Herald on 3 October 1997 Matthew Russell pointed out that the money in the interest expense account was used as a fall-back position if the Public Trustee did not have sufficient money to keep operations going and to cover against losses caused by adverse interest rate movements. Today Gary Moore, the Director of NCOSS, wrote a letter to our office which stated:

NCOSS is seeking your support to amend the Bill so that the $35 million in surplus from interest on the common fund will be spent on urgently required social programs, rather than being sent to consolidated revenue in order to retire debt.

Argument that funds be hypothecated to particular social programs are not new. In its last two Pre Budget submissions, NCOSS argued that the revenue raised from Land Tax should be used for affordable housing programs . . . In the case of the interest funds held by the Public Trustee, it is entirely reasonable to suggest that this money be spent on social programs assisting the groups of disadvantaged people from whose money the interest fund was raised.

In an attachment to the letter entitled "Proposed amendment" NCOSS further stated:

NCOSS understands that disadvantaged older people, people with disabilities and mental health problems, are some of the key clients of the Public Trustee. Accordingly, NCOSS believes an in-principle argument can be made that spending from this surplus could be directed towards programs and services for these groups in the community . . .

Besides aged care - residential and community, the State Government has few specific programs for disadvantaged older people.

Examples of high priority activities include:

•more employment assistance for mature aged people;

•pensioner concessions on private bus services;

•increased home and community care assistance;

•community education programs on information technology; and

•improved public community housing assistance.

This is an ideal opportunity for the Government to use those funds and to set the social agenda in the lead-up to the next election. The Government could express its Labor bona fides with a really good social justice package in the lead-up to the next election. Instead, we hear about balancing the budget and money going into consolidated revenue. That does not wash with the Greens; we do not support it and we are saddened that the Government has seen fit not to move in the direction that I am sure the majority of people who support the ALP in New South Wales would expect. It is a great shame. NCOSS sought an amendment to specify either an amount or a proportion of the surplus income from the original Common Fund. NCOSS told my office today that it would be prepared to support such an amendment only if there is a legislative requirement that there be no privatisation of the Public Trustee for the life of this Parliament, and if a consumer protection code is inserted in the legislation.

Another issue raised by the bill is ethical investment. For a long time the Greens have been concerned about ethical investment and superannuation funds. This is an ideal opportunity to create ethical investment, and, rather than balance the budget, use these funds to support the aged people who have contributed to them. This is an obvious opportunity for the Government to move towards ethical investment, which has been ignored so far despite a great number of requests from the Greens and other members of this House. Today I received a letter from Paul Gavin, the Chairman of the Public Service Association Departmental Committee, stating its opposition to the legislation. The letter stated:

The Public Service Association of NSW has prepared a response to the Public Trustee Corporation Bill 1997 Green Paper and a copy of this response is attached . . .

Association members employed by the Public Trust Office have expressed extreme concern regarding the corporatisation proposal and the subsequent effect on their careers and the public generally.

Matters of concern are:

Appropriation of Funds . . . The Association believes that transferring funds from the Public Trust Office (PTO) is not a valid argument for corporatisation. The present Act requires amendment in terms of the PTO’s funds management responsibilities and amendments to that Act would allow appropriation of current surpluses to the Government and would achieve the same result. Provision to prevent any future

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accumulation of excess income should also be included. The PSA believes this is a totally separate issue to corporatisation.

Service to the Community . . . The consequences of corporatisation to the Community appears not to be beneficial. Major concerns are the higher fees structure allowable under the Corporation Bill and the $2,000 fee on estate matters less than $50,000 and the higher fees for Powers of Attorney clients. This provision will adversely affect members of the Community.

Social Program Funding . . . The lack of detail on the Social Program Funding aspects of Corporatisation leads the Association to believe that the Government is more concerned with taking the surplus from the Common Fund than it is about the long term viability of the organisation.

. . . The Association is also concerned that there has been insufficient public debate on this issue manly because of the poor advertising of responses to the Green Paper. The PSA understands that the majority of responses were in the negative, appearing to support the philosophy behind the original 1913 Act.

In light of these concerns the Association believes that the most appropriate action by the Parliament would be to call for an end to plans for corporatisation and to proceed with updating of the 1913 Act to correct deficiencies in funds management procedures, charging of fees and other powers that need to be updated.

Another activist in this debate is Gary Moore from the Council of Social Service of New South Wales - NCOSS. In a press release headed "Keep the Public Interest in the Public Trustee", dated 27 May 1998, he stated:

The Council of Social Service of NSW (NCOSS) is calling on the Carr Government to review its decision to corporatise the Public Trustee.

The Public Trustee provides the safeguard for those unable to effectively arrange their estates and affairs. Its clients include disadvantaged older people, people with disabilities, and low income families.

NCOSS has been approached by many people concerned that the Government’s Public Trustee Corporation Bill, due for debate this week in State parliament, removes essential protections for these vulnerable people . . .

It is suggested that the fiscal and customer service interests of the Public Trustee’s clients will take a back seat to market forces and the Government’s dividend stream.

The Bill provides no guarantees that the Public Trustee will not be privatised in the future. It establishes no specific or rigorous consumer protection measures for current and future clients.

In particular, the Bill allows higher fee structures which will adversely affect clients. It lacks detail about the ongoing social program funding responsibilities of the proposed corporation.

Some people see this corporatisation simply as Treasurer Michael Egan’s desperate grab for the $36 million surplus in interest, built up over the years, in the Public Trustee’s Common Fund.

Are these funds already counted in next Tuesday’s State Budget? Were they included in the Treasurer’s recent discussions with Standard and Poor’s about AAA ratings.

After ensuring that Public Trustee clients receive their entitlements, the Government should be targeting this surplus to spending on community care, employment, transport and housing programs for client groups, such as older people.

The funds shouldn’t just disappear into consolidated revenue to fix deficits.

Parliament’s Public Accounts Committee has previously called for management reforms in the Public Trustee’s Office. It should correct deficiencies in funds management procedure. However, this doesn’t automatically mean making it a full blown business.

I am disappointed that we came so close to discussing ideals that could have enabled the Greens to hold the Labor Government in high regard, but we have failed to make that connection on this bill, and as a result, the Greens oppose it.

Reverend the Hon. F. J. NILE [8.37 p.m.]: The Public Trustee Corporation Bill has been the subject of fairly long debate. The bill will constitute the Public Trustee Corporation and establish the corporation as a statutory State-owned corporation under the State Owned Corporations Act 1889. It will confer on the corporation certain powers, and dissolve the Public Trust Office and abolish the office of Public Trustee. On the surface that seemed to be a positive move. The Christian Democrats have supported the principle of various corporatisation bills that have been introduced.

The Christian Democrats support privatisation if the rights of workers are protected and if there are no forced redundancies. Other honourable members oppose the principle of privatisation on any basis. Usually it is argued that corporatisation is necessary to achieve greater efficiency in a slack organisation, such as the State Rail Authority and other bodies. A submission from the Public Service Association states:

The Public Trust Office is already an efficient and effectively managed organisation which operates at no cost to the Government and provides a valuable service to the community of New South Wales. The PTO manages investments in accordance with the provisions of the Public Trustee Act 1913 and in doing so has provided above market interest to PTO clients, and in the 84 years of its existence it has not been required to use the Government guarantee against any loss.

The association provided figures that show that 90.35 per cent of applications were lodged with the Supreme Court within two months of receiving the report of estate total; the average time taken to administer an estate was 6.54 months; 83.44 per cent of matters are completed in under eight months; and
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probate requisitions were raised in 1.89 per cent of matters dealt with.

The Public Trust Office deals with what we broadly call the working class in society. The average value of estates granted in 1995-96 was $120,103, which is an indication of the extent to which the Public Trustee Office fulfils its mission of providing a service to that section of the community. I am not assuming that the Government is suggesting that corporatisation of the Public Trust Office will result in a cut in services. However, when corporatisation occurs there is always pressure to provide a share profit or benefit to shareholders, that is, the Treasurer, et cetera. In such situations services are evaluated and consequently some unprofitable service may be cut.

In the past the Public Trust Office has met a need, but that need could be cancelled in the future. In paragraph 2.2.5 of the green paper the Government alleged that the Public Trust Office has been recording annual trading shortfalls. However, that is not the case. Examination of the organisation’s turnover shows that rather than a shortfall, a surplus has been recorded every year except 1994-95, when there was a major write-down in the value of assets, and 1992, when provision was made for employee entitlements. In 1996-97 a surplus of $4.6 million was recorded; in 1995-96, $1.4 million; in 1993-94, $1.5 million; and in 1992-93, $1.6 million. Therefore, there seems to be no basis for arguing that the Public Trust Office should be corporatised to make it more efficient and to ensure that it does not record a shortfall in the future.

We agree with concerns expressed by other honourable members about the desirability of corporatising the Public Trust Office at this time. However, we are concerned that insufficient safeguards are provided to ensure that trust moneys will not be used by the Government, if so tempted. Honourable members know that governments always look to hollow logs, and the Government may regard the Public Trust Office as a hollow log.

At a briefing the Treasurer gave an assurance that trust moneys would not be used by the Government, but sometimes pressure is placed on a government to find money in a hurry. That occurred in the past in relation to the poker machine tax, the hotel tax and so on, although the Government had implied that it would not happen. In this case it has been proposed that invested moneys could be transferred to the State budget, although the Treasurer has said at this stage that that will not happen. For those reasons we reserve our judgment on this bill.

The Hon. R. S. L. JONES [8.43 p.m.]: How right the Leader of the Opposition was when he said that when the coalition was in government Treasury tried to corporatise the Public Trust Office but he opposed it! Presumably if he were in government now he would be arguing exactly the opposite if Treasury were able to convince him. Treasury is always trying to find hollow logs but this hollow log does not belong to Treasury; it belongs to the people who have invested moneys in the Public Trust Office - and some of them may or may not be able to be found. Honourable members will be aware that on 26 June 1997 I moved:

That this House declines to give the Public Trustee Corporation Bill a second reading until such time as the Government has released for public comment and consultation a "Green Paper" on the effects of the dissolution of the Public Trustee Office and the abolition of the office of the Public Trustee.

That motion was passed by the House and subsequently, in October 1997, the Attorney General’s Department published a paper entitled "Public Trustee Corporatisation Bill 1997". Unfortunately, that paper proved to be merely a sales pitch for the corporatisation of the Public Trustee - and not a very good one at that. Not only did that paper put only one side of the story - the argument for corporatisation - it did so in bureaucratic language with no clear and concise summary, and made virtually no allusion to the drawbacks of corporatisation. As a consequence, ordinary clients of the Public Trustee could hardly be expected to understand the propositions put forward in the green paper; nor could they be called upon to make a proper judgment on the advisability of corporatisation.

That brings me to another important issue: how well the Government has consulted, through its green paper, on the effects of the proposed corporatisation of the Public Trustee. Whilst the Government will no doubt individually list the groups that were contacted and place on record the number and type of advertisements placed in the print media, I wonder how many of the actual clients, investors and beneficiaries of the Public Trustee have been notified about the proposed changes and urged to comment on them? As the Public Accounts Committee made clear in its June 1997 report entitled "Matters Arising from the Auditor-General’s 1996 Report", corporatisation of the Public Trustee represents a fundamental change to the office that the New South Wales public has known for the last 83 years.

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Corporatisation should be clearly and thoroughly explained to all who are directly concerned to enable them to decide what their best course of action would be in the new circumstances. From the oral and written communications I have had with and from people that presently have wills lodged with the Public Trustee, it appears that they have received no notification whatsoever. Why is this so? While I concede that notification would have been a lengthy task, it would not have been impossible, and it is certainly warranted. After all, these people have chosen to lodge their wills with the Public Trustee on the basis of present practices and statutory provisions, and they may well have entirely different ideas if they were made aware that those practices and provisions were about to change. An article entitled "Ways with wills" on page 5 of the "Money" supplement of the Sydney Morning Herald of 17 September 1997 said:

Market research shows clients choose the Public Trustee for its (government) guarantee and because it is perceived to be safe.

Interestingly enough, that article also said:

The Public Trustee is backed by a government guarantee which protects any funds invested in it.

Therefore it is more than clear that while the Government has always contended that the proposal for corporatising the Public Trustee has been widely publicised and Public Trustee staff have been alerting current and intending clients of the resultant changes, the proposed abandonment of the government guarantee in respect of funds committed after the commencement date of the new Act runs directly counter to recent public advertisements.

It is also more than clear that the persons most likely to be affected by the proposed corporatisation of the Public Trustee have not been adequately consulted. The deficiencies of the green paper do not stop there. The paper also fails to include a firm and express commitment, on behalf of the Public Trustee, to the principle of underprivileged community service. The essential purpose of the establishment of the Public Trustee was the furtherance of the public good. It is in this vein that the Public Trustee has served the particular needs of lesser privileged members of the community with allowance for their particular needs and circumstances. The existing Public Trustee’s obligation, as cited in paragraph 2.1.5 of the green paper, is:

The Public Trustee Office acts alone or jointly with any other person as executor of a will or administrator of an estate; as trustee of assets, particularly for people under eighteen years of age or under any other legal disability; as manager of the estate of protected persons; and as attorney or agent for any person. The Public Trustee Act sets a unique obligation on the Office in that it may not decline to administer an estate solely because of the small payment that it would receive for its work in administering a low value estate.

However, the green paper merely includes a statement that "the service to the traditional clients of the Public Trustee will be preserved". Exactly how this is expected to be achieved is unclear, especially considering that the changes proposed in this bill will allow for a higher fee structure to be imposed by the Public Trustee, that is, a $2,000 fee on estate matters worth less than $50,000 and higher fees for power of attorney clients. The bill will of course allow the Government to appropriate $35 million of the $80 million of the undistributed earnings of beneficiaries held in the Public Trustee’s interest expense account. Every year since the 1940s, undistributed income has been retained by the Public Trustee in a special interest expense account to act as a fall-back position if it did not have sufficient money to keep operations going, and to cover losses caused by adverse interest rate movements. This amount has been accumulating with compound interest for more than 40 years.

The appropriation by Treasury of the surplus, which accrued after distributing interest payable on funds accumulated from year to year, will therefore effectively strip capital reserves from the moneys to be made available to the new Public Trustee Corporation. Similarly, the appropriation of moneys set aside in a special interest expense account, from undistributed income over many years, pays no regard to the fiduciary nature of such a holding. In addition to those problems, the Government is effectively appropriating to itself a major portion of assets to which it has no rights and which are essentially private property. After all, the assets of the Public Trustee do have beneficiaries. While they may not be readily identifiable, legally the assets under trust have owners.

As the Public Trustee has an equitable duty to identify and account to each beneficiary for his or her entitlement, regardless of the provisions of section 36A(5) of the present Act, those funds should rightly go to the beneficiaries of the fund who helped create it. While there could be lengthy debate about the rights and wrongs of Treasury being able to transfer surplus funds from the Public Trust Office to consolidated revenue, the Government will argue that the proposed corporatisation of the Public Trustee is intended to do more than that and will ensure that the office is transformed into a more efficient and effective organisation. Admittedly, certain aspects of the Public Trustee could be improved. For example, the Law Consumers Association criticised the Public
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Trustee’s cost structure and the time it takes to complete many matters.

For many years the association has published a do-it-yourself probate kit, which was recently updated in conjunction with the Probate Division of the Supreme Court. With the kit, ordinary people routinely obtain probate within three to four weeks of commencing the procedure, with costs being limited to the $125 kit, the cost of an advertisement and the filing fee. Solicitors still have a scale of costs which increases with the gross value of the estate, and with imposed administration charges their fees approximate to 2 per cent of the estate. On the other hand the Public Trustee charges twice this amount. That matter needs urgent examination. It is highly debatable whether the performance of the Public Trustee is likely to be improved as a result of corporatisation.

While all improvement comes from change, all change is not necessarily improvement. In any case, while the present Act could benefit from amendments to Public Trust Office fund management responsibilities and fee charges, the office does not need to be corporatised in order to achieve that. Finally, I am concerned that corporatisation of the Public Trustee is the precursor to its privatisation. As the Minister said in his second reading speech, several years ago private trustee companies supported by the legal profession moved to obtain the rights of election, which is presently an exclusive right of the Public Trustee.

Having the right of election means that the trustee can effectively give probate or letters of administration independently of the probate court. This is a useful facility when there are difficulties complying with the rules of the court. The ultimate outcome is quite clear and could give significant commercial advantage to trustee companies. Therefore, it would not be in the community’s interest to sell the Public Trustee and give the rights of election into private hands that could avoid the scrutiny that the probate court provides to all other applications.

Normally I support corporatisation, and very often privatisation, when it is in the public interest, but this is not an example of public interest. In light of all my concerns, I oppose the bill and call on the Government to end its plans to corporatise the Public Trustee and address the real issues that need urgent attention. The 1913 Act may need updating to address deficiencies in its funds management procedures and fees, but there is no need to corporatise the Public Trustee to achieve those objectives. I thank my brilliant policy adviser, Jennifer Emblem.

The Hon. FRANCA ARENA [8.53 p.m.]: I oppose the Public Trustee Corporation Bill. If I had not already decided to oppose this legislation, my resolve was affirmed this morning when I heard the Hon. I. M. Macdonald on radio being interviewed about the proposed privatisation of the electricity industry. It was interesting to hear his comments. I shall not repeat his words, but the effect of them was, "Here we have the Federal Labor Opposition complaining about the privatisation of Telstra, and in New South Wales all we are doing is corporatising and privatising everything we can get our hands on!" The New South Wales public, especially the Labor voting public, did not give the Labor Party a mandate to corporatise or privatise, which is the first step, everything in the State so that eventually nothing will be left for future generations. The Hon. R. S. L. Jones said he generally supports corporatisation; I do not. The submission from the Public Service Association on the green paper was very interesting. Its first paragraph states:

The Public Trust Office is already an efficient and effectively managed organisation which operates at no cost to the Government and provides a valuable service to the community of New South Wales. The PTO manages investments in accordance with the provisions of the Public Trustee Act 1913 and in doing so has provided above market interest to PTO clients, and in the 84 years of its existence has not been required to use the Government guarantee against any loss.

The association provided a detailed submission, which I have read carefully. One matter about which I was unaware was that interest paid to clients has always been above market rates. The association sees no need to corporatise the Public Trustee. I shall not read the submission as I am sure most honourable members would have received a copy. However, it was accompanied by a letter that listed matters of concern under various headings. Under the heading "Appropriation of Funds" the letter stated:

The Association believes that transferring funds from the Public Trust Office . . . is not a valid argument for corporatisation.

Under the heading "Service to the Community" the letter stated:

The consequences of corporatisation to the Community appears not to be beneficial. Major concerns are the higher fees structure allowable under the Corporation Bill and the $2,000 fee on estate matters less than $50,000 and the higher fees for Powers of Attorney clients. This provision will adversely affect members of the community.

Under the heading "Social Program Funding" the letter stated:

The lack of detail on the Social Program Funding aspects of Corporatisation leads the Association to believe that the Government is more concerned with taking the surplus from

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the Common Fund than it is about the long term viability of the organisation.

That paragraph encapsulates exactly the purpose of the bill. I received correspondence also from the Law Society, which enclosed a copy of a letter sent to Mr Laurie Glanfield, Director-General of the Attorney General’s Department. It stated:

I am responding to your invitation to comment on the Green Paper . . .

I understand that the principal purpose of the proposed corporatisation of the Public Trustee is to establish the Public Trustee Corporation as a State Owned Corporation designed to act viably on a competitive basis with other trustee companies and "to exhibit a sense of social responsibility".

The essential purpose of the establishment of the office of the Public Trustee was the furtherance of the public good. It is in this vein that the Public Trustee has served the particular needs of lesser privileged members of the community with allowance for their particular needs and circumstances. I view with some disquiet the absence in the Green Paper of a firm and express commitment to this important principle of underprivileged community service . . .

It is important to note the comments of such valid organisations as the Public Service Association and the Law Society. The Hon. I. Cohen read onto the record the letter from the Council of Social Service of New South Wales, which I too received, opposing the legislation. NCOSS said that the moneys should at least be directed to the needy members of the community. I am not terribly familiar with this issue, but although I have not been able to speak to any of these organisations, I have read their material and I oppose this legislation.

The Hon. J. W. SHAW (Attorney General, Minister for Industrial Relations, and Minister for Fair Trading) [9.00 p.m.], in reply: When this bill was last before the House the second reading debate was deferred until a green paper outlining the effects of the dissolution of the Public Trust Office and the abolition of the Public Trustee had been circulated. A paper drafted in consultation with the office’s steering committee, which assisted with the legislative proposals, was released to public comment in October 1997. It was circulated to members of the Legislative Assembly, members of the Legislative Council, the Law Society, the Bar Association, the Trustee Corporations Association of Australia, the General Secretary of the Public Service Association of New South Wales, the New South Wales Public Accounts Committee, the Auditor-General and heads of jurisdiction. It was also circulated to each of the clerks of the Local Courts who perform agency work for the Public Trustee.

In order to reach clients of the Public Trustee and interested members of the public, the availability of the discussion paper and a toll-free inquiry line were advertised in the Sun-Herald, the Sunday Telegraph and the Sydney Morning Herald; in newspapers circulating in the Armidale, Lismore, Newcastle, Broken Hill and Wollongong regions; and in the Arabic, Lebanese, Chinese and Vietnamese press. The discussion paper described the role and functions of the existing Public Trustee, and provided information on the funding of the Public Trust Office and the operation of the common fund under the Public Trustee Act 1913. It discussed the reasons for corporatisation, gave an overview of the Public Trustee Corporation Bill 1997, and dealt with the governance of the proposed entity, with social policy aspects and with the continuing functions of the new entity as executor and administrator. It addressed the impact of corporatisation on clients and staff. It also discussed the provision in the bill for the appropriation of the surplus generated out of the income from investments made to the common fund under the Public Trustee Act 1913.

Despite the extensive advertising, the final response level on the paper was very low. The Public Trust Office and my department received almost 150 inquiries about the proposals. The paper was offered to all those who inquired. However, a total of only 14 respondents made submissions on the paper. Three submissions were received from members of the public, three from Ministers, one from a member of the Legislative Council, two from lawyers - including the President of the Law Society - two from the trustee industry, two from real estate agents and one submission from the Public Service Association. Some respondents opposed the bill while others supported it. With such a low response rate, the submissions do not give a clear indication of support for or opposition to the bill. It can be speculated that the information set out in the paper allayed some concerns about the proposals. I remind honourable members of the protections for the disadvantaged contained in the bill.

The new corporation will continue with its service to the disadvantaged in the following ways. The new entity will not be able to refuse an estate on the basis of low value. The corporation will retain the unique powers of the Public Trustee for the administration of intestate estates. The power to distribute assets of small estates where probate has not been granted will continue. The corporation will have the power to waive fees in cases of hardship, and the portfolio Minister, with the approval of the
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Treasurer, will have power to give directions to the board of the corporation for the performance of non-commercial activities, notice of public sector policies, and directions in the public interest under the State Owned Corporations Act 1989. The Public Trustee Bill establishes a state-owned corporation for the provision of estate and trust services. It will be accountable to the State of New South Wales via its shareholders, being the Treasurer and a Minister nominated by the Premier, who will hold their shares on behalf of the State.

Corporatisation will modernise the governance of the Public Trustee while preserving its traditional functions in the provision of estate and trust services. The only other matter with which I propose to deal is the spectre of privatisation, which was raised by some members in their contributions to the debate. Let me say unequivocally that the new entity will not be privatised. The process of incorporation as a State-owned Government corporation results in ownership of the shares in the new entity on behalf of the State of New South Wales. The Public Trustee Corporation Bill will create a new corporate entity established under the State Owned Corporations Act 1989. The entity will have share capital, and two shareholders - being the Treasurer and a Minister nominated by the Premier - will hold the issued shares in the entity on behalf to the State of New South Wales. There will be a board of directors and a chief executive officer.

Provisions governing the holding of shares, transfer and transmission of shares, general meetings, the directors, the convening of directors’ meetings, and the distribution of profits are set out in the memorandum and articles of association of the corporation. Transfer of ownership of the entity to private shareholders cannot take place without the approval of both Houses of Parliament. This is because the memorandum of association provides that the memorandum and articles cannot be altered or added to in any way that is inconsistent with the provisions in schedule 6 of the State Owned Corporations Act 1989.

This schedule includes provisions relating to the ownership of shares in the corporation, including: only eligible Ministers may hold shares; and the shareholders hold their shares in the corporation for and on behalf of the State of New South Wales. The State Owned Corporations Act provides that the memorandum and articles of association cannot be altered or added to in a way that is inconsistent with schedule 6 unless and until resolutions approving the alteration or addition have been approved by both Houses of Parliament. In short, there can be no privatisation without the approval of the New South Wales Parliament. Honourable members can be assured that the Government has no intention of privatising the Public Trustee Corporation.

Question - That this bill be now read a second time - put.

The House divided.

Dr Burgmann Mr Primrose
Ms Burnswoods Ms Saffin
Mr Dyer Mr Shaw
Mr Egan Ms Tebbutt
Mr Johnson Mr Tingle
Mr Kaldis Mr Vaughan
Mr Kelly Tellers,
Mr Macdonald Mrs Isaksen
Mr Obeid Mr Manson

Noes, 24

Mrs Arena Ms Kirkby
Mr Bull Mr Lynn
Mrs Chadwick Mrs Nile
Mr Cohen Rev. Nile
Mr Corbett Dr Pezzutti
Mrs Forsythe Mr Ryan
Mr Gallacher Mr Samios
Miss Gardiner Mrs Sham-Ho
Mr Gay Mr Rowland Smith
Dr Goldsmith
Mr Hannaford Tellers,
Mr Jones Mr Jobling
Mr Kersten Mr Moppett

Question so resolved in the negative.

Motion negatived.