DTC Genomics regulation in Europe

'Current developments in the regulation of direct-to-consumer genetic testing in Europe' by Louiza Kalokairinou, Heidi C. Howard and Pascal Borry in the (2015) 15(2-3) Medical Law International 97-123 comments

Over the past years, direct-to-consumer (DTC) genetic testing has provoked controversy regarding its still questionable risks and benefits. The safety and performance of such devices, when entering the European market, are currently regulated by the Directive 98/79 EC of the European Parliament and of the Council on in vitro diagnostic medical devices. In September 2012, a new Regulation was proposed to replace this Directive, and the legislative process is still ongoing. This article presents the main points of the European Commission’s proposal for the new Regulation and the subsequent amendments voted by the European Parliament, aiming to evaluate the potential contribution of the proposal for a more effective regulation of DTC genetic testing in Europe. In this regard, the proposal seems to enhance the current regulatory framework by further elucidating the scope of the Regulation and by establishing a risk-based classification system that guarantees increased pre-market scrutiny of the tests. Furthermore, the proposal attempts to establish higher safety and performance requirements and to enhance transparency. In addition, the European Parliament introduced amendments according to which appropriate genetic counselling is required in the context of genetic tests, and such tests are classified as prescription only, banning, at the same time, their DTC advertising. These developments have already provoked controversy among stakeholders and, if eventually adopted, they may lead to a radical change in the European DTC genetic testing landscape. In this light, the political decisions that will be taken imminently will be determinant.

In introducing the article they state

Even though proponents of [direct-to-consumer (DTC) genetic] tests claim that they enhance the autonomy of consumers and promote their education regarding genetics, there is great concern among policymakers, professional groups and scientists regarding various ethical, social and regulatory aspects associated with such services. These concerns include, among others, issues regarding the questionable validity and utility of DTC genetic tests and the often poor and misleading information accompanying them, as well as concerns regarding the privacy of results and the possible stigmatization and discrimination resulting from a privacy breach. In addition, it is feared that the absence of adequate medical supervision and genetic counselling in this context may lead to inappropriate health decisions and unnecessary burden on the healthcare system if consumers request and obtain unnecessary consultations with medical professionals. Moreover, the effectiveness of regulation regarding DTC genetic testing has been widely debated, both in Europe and in the United States, and it is further complicated by such tests being mostly marketed through the Internet, rendering the enforcement of relevant legislation more challenging.

The aim of this article is to outline exactly how regulation of DTC genetic testing in Europe is likely to be affected by the proposed Regulation on In Vitro Diagnostic Medical Devices, which is currently under discussion in a trialogue between the European Parliament, the Council of the European Union (EU) and the European Commission. More specifically, after providing a brief introduction to the historical background of the proposed regulation, the proposed amendments will be summarized and assessed, focusing especially on the scope of protection provided by the proposed regulation, the risk classification of devices, the regulation of self-tests, clinical evidence and clinical utility, transparency and truth in labelling, canalization and advertising of genetic tests and, finally, regarding genetic counselling and informed consent.

The authors conclude

Adopting the current proposed Regulation and the amendments introduced by the Parliament will mean that a very broad range of genetic tests, including tests for both health-related and lifestyle purposes may fall within the scope of the Regulation, regardless of the jurisdiction in which the manufacturer is established, as long as they are offered to people residing in EU Member States. Furthermore, DTC genetic tests will be subject to additional requirements set for self-testing devices, whilst, according to the new risk-based classification system, (DTC) genetic tests will have to go through a pre-market assessment by independent notified bodies. In this respect, the proposed Regulation and the amendments voted by the European Parliament improve upon the current regulatory framework and may raise the standards of safety and performance for genetic tests entering the European market. Nevertheless, the lack of definition and requirements for the assessment of clinical utility might render its inclusion in the pre-market evaluation of IVD devices meaningless and/or burdensome for the notified bodies.

Furthermore, the European Parliament’s amendments make mandatory the involvement of health-care professionals in the process of genetic testing by requiring appropriate genetic counselling for every type of genetic test as well as by classifying all genetic tests as prescription only and banning DTC advertising for such tests. A full implementation of these provisions would mean, in theory, that genetic testing companies will have to redirect the provision of their products and their marketing campaigns to health-care professionals since directly accessing consumers in the EU will be illegal. In this way, the amendments attempt to bring genetic testing back to the traditional, physician-centred model of healthcare, despite the recent shift to a model focusing on consumer empowerment, as initiated by DTC genetic testing companies.

Even though requiring genetic counselling and the involvement of health-care professionals in the genetic testing process might mitigate the risks stemming from particular subsets of tests, the competence of the EU to regulate clinical practice in such detail has been contested. There are concerns that the very broad definition of genetic tests provided by the proposal, in combination with particularly strict requirements for pre-market approval, without taking into account risks and benefits associated with each type of test, would be overly restrictive and stifle innovation and competitiveness in Europe. Hence, it may be important for the restrictions imposed on the tests to be proportionate with the potential risks stemming from such tests in order to achieve an appropriate balance between the protection of public health and the right of the individuals for self-determination and access to their genetic information.

As a general comment, it may be noted that the amendments introduced by Parliament emphasize medical supervision and genetic counselling in order to address some of the risks potentially stemming from DTC genetic testing. At the same time, an opportunity to establish robust criteria of clinical validity is being missed, whilst the inclusion of clinical utility in the pre-market assessment is not likely to have any impact on DTC genetic tests. In this regard, it may be argued that the medical prescription model and the mandatory pre- and post-test genetic counselling have been valued more than ensuring the good quality of the tests. This policy choice might prove to be problematic since it shifts responsibility to health-care professionals who may often not be adequately equipped to assume the role of gatekeepers.

The Council, on the other hand, seems to move closer to the position of the Commission and attempts to ensure that IVD devices are thoroughly assessed when entering or being put into service in the European market and they are adequately surveyed after that.

When it comes to DTC genetic testing, the approaches adopted by the Parliament and the Council are divergent. It remains to be seen how this opportunity to change the DTC genetic testing landscape will be handled on the political level and on which side the pendulum will settle.

Finally, it should be kept in mind that the Regulation is still a long way from implementation. A trialogue among the Commission, the Parliament and the Council started in October 2015. This procedure might last for several months. Taking into account that the proposal of the Parliament provides a 3-year transition period before implementation of the Regulation, whilst the Commission and the Council propose a 5-year period, and given the rapid developments in the DTC industry, it is not clear to what extent the reforms will impact the DTC genetic testing market.

'Should Extinction be Forever? Restitution, Restoration, and Reviving Extinct Species' by Christian Diehm in (2015) 37(2) Environmental Ethics comments

 “De-extinction” projects propose to re-create or “resurrect” extinct species. Perhaps the most common justification offered for these projects is that humans have an obligation to make restitution to species we have eradicated. There are three versions of this argument for de-extinction—one individualistic, one concerned with species, and one that emphasizes ecological restoration—and all three fail to provide a compelling case for species revival. A general critique of de-extinction can be sketched that highlights how it can both facilitate inattentiveness to biological and ecological boundaries and foster a managerial mentality toward the natural world.

'Towards a Law of the Mammoth? Climate Engineering in Contemporary EU Environmental Law' (Tilburg Law School Research Paper No. 07/2015) by Han Somsen comments

 In an article that made waves when it was first published in 1996, judge Easterbrook scorned the idea that the technological reality of cyberspace justified talk about or a need for ‘Cyber Law’. Just as there is no need for a ‘Law of the Horse’ merely because horses give rise to legal claims, he argued, conventional legal principles and reasoning are sufficiently accommodating to absorb new legal challenges that arise in the wake of cyberspace. We may likewise doubt the need for a ‘Law of the Mammoth’, even though technologies emerge that harbour the prospect of bringing back the woolly mammoth from extinction, reversing climate change, and creating new life forms. Cyber Law is now firmly established, of course, and Easterbrook also appears to have lost the academic debate from the likes of Lawrence Lessig. That fact notwithstanding, the onus to show that the time has come for a Law of the Mammoth clearly is on those staking the claim. 

The purpose of this article essentially is to prepare the ground for that argument, with particular but by no means exclusive reference to climate engineering. Instead of framing the question as one of a confrontation between environmental law and climate engineering, a multitude of technologies instrumental in intentionally enhancing the environment suggests that it is appropriate more generically to consider the introduction of a novel concept in environmental law that captures the essence of such efforts. In the same vein as ‘human enhancement’ has come to be distinguished from ‘medical therapy’, in view of novel environmental policy uses of technologies it is submitted that we should consider the virtues of distinguishing environmental ‘enhancement’ from environmental ‘improvement’.

Occupations and Exclusion

The De-Licensing of Occupations in the United States by Robert J. Thornton and  Edward J. Timmons in (2015)  Monthly Labor Review comments

Occupational licensing directly affects nearly 30 percent of U.S. workers today and continues to grow in density and scope. In this article, we identify and analyze those rare instances when occupational licensing laws have been eliminated — what we refer to as “de-licensing.” We also discuss recent examples in which courts decided to limit the scope of occupational licensing laws, and we analyze recent efforts (almost uniformly unsuccessful) of a few states to de-license groups of occupations. The reason proposed for most of these efforts is that excessive levels of licensing have hindered job creation, especially for people with lower levels of education. We argue that the paucity of successful de-licensing efforts is due to intense lobbying by associations of licensed professionals as well as the high costs of sunset reviews by state agencies charged with the periodic review of licensing and its possible termination. ...Addressing de-licensing is important because it raises several questions. Once an occupation is licensed, is it likely to remain licensed, or do effective mechanisms exist to periodically reevaluate whether the continued licensing of the occupation is in the public interest? What effects has de- licensing had or could be expected to have on the numbers of practitioners and earnings levels in the de-licensed occupation? Various studies have found that licensing, much like unions, can reduce practitioner numbers while increasing earnings. Does de-licensing cause converse effects? That is, would de-licensing increase the number of practitioners while decreasing earnings? If so, how sizable are these effects and how rapidly would they occur? These questions are particularly important because the extent to which job regulation (such as licensing) inhibits job growth and the potential for deregulation to promote job growth have recently become important national issues.

'Preventing abuse through pre-employment checks: an international review' by Jill Manthorpe and Valerie Lipman in (2015) 17(6) The Journal of Adult Protection 341-350 comments

The purpose of this paper is to summarise the findings of a desk-based international review investigating the checking of staff and volunteers working with adults who are vulnerable or at risk (or similarly defined) receiving social care in their own homes, or in day centres or residential care. Design/methodology/approach – In England, as part of the government’s attempts to prevent harm to vulnerable people, employers must check if their staff or volunteers are barred from working with vulnerable adults in the health and care sectors or if they have a relevant criminal record. This review sought to explore practices elsewhere, with a view to informing policy and practice debates. The review was undertaken in winter 2014-2015. It mainly involved a search of internet-based material and databases. This was further informed by communications with experts and practitioners from different countries. Findings – The review found a variety of practices, ranging from no checks to substantial checks involving fingerprinting. Reasons for checks identified in different national contexts extend from efforts to stop fraudulent use of government subsidies to minimising the risk of harm to vulnerable adults, and more positively to enhance user and public trust in care providers. A small number of countries place particular emphasis on the rights of individuals to privacy and rehabilitation and this moral imperative overrides other policy goals. This review highlighted a lack of clarity in publicly available documents about the potentially multiple policy goals of different schemes and suggests that there may be advantages to clarifying the options available from other countries. Research limitations/implications – This review was confined to English language material and to material located through internet searching. Some material may not have been updated on internet sites. Originality/value – The details of the processes have not previously been collated to the best of the authors’ knowledge.

The authors cover

 the findings of a literature review undertaken to identify the value for English policy and practice communities of learning from international approaches to pre-employment checks in care work with adults. The review collected information on the procedures, aims and outcomes of such checks and searched for evidence on the effectiveness of different approaches taken. The review process was one of systematically searching for evidence concerning social care employment practices outside England but from English language sources. In England the system of pre-employment and similar checks for people working with or volunteering with “vulnerable adults” and children is administered by the Disclosure and Barring Service (DBS) on behalf of the government. 

Following the Savile Inquiry report into the abuse of vulnerable children and adults by the media celebrity Jimmy Savile (see Lampard, 2014), the DBS scheme was recently cited by the Secretary of State for Health, Jeremy Hunt MP (Hunt, 2015), as an example of current processes, policies and laws that “have made it much less likely that a predator like Savile would be able to perpetrate these crimes today”. While the Secretary of State rejected the Lampard report’s recommendations for DBS checks to be extended to all volunteers in hospitals, he voiced his support for them as part of systems of prevention whereby volunteers who are carrying out regulated activity such as being in close contact with patients are now required to undergo such checks, as well as members of staff. 

In 2013-2014, nearly four million (3,948,733) DBS checks were carried out in England and Wales on people working with children and vulnerable adults, of which 843,498 (21 per cent) were on volunteers (Disclosure and Barring Service, 2015). These figures are not disaggregated by whether the applicant is working with children and/or vulnerable adults. The system of disclosure, checking and possibly barring of employees and volunteers in England has changed over the past decade. It has been described variously as draconian (Appleton, 2014) or, in contrast, as one recent newspaper article reported (Lyons, 2014), over-permissive: Thousands of people considered potential abusers are escaping bans on working with vulnerable adults after the Home Secretary eased rules deemed “excessive”. In 2009, 3,582 people were barred from working in care homes, hospitals and other jobs, but bans fell to 1,293 last year, official figures show. Under the old system bans were issued regardless of the job someone was doing when caught committing a crime or the subject of a complaint. Now only those working directly with vulnerable people at the time can be barred (Lyons, 2014). 

According to Appleton, Director of the Manifesto Club civil liberties group, “There is no other country which has a system on this scale, with the objective of checking all those who have a certain kind of contact with children in the public sphere” (Appleton, 2014, p. 37). Our review sought to investigate the evidence behind this claim by exploring what is known about such processes internationally although our focus was on systems covering vulnerable adults, not children, and on social care not health services. 

This paper summarises the findings of our desk-based review investigating the checking of staff and volunteers working with adults who are vulnerable or at risk (or similarly defined) in the context of the DBS in England (for the full report see Lipman and Manthorpe, 2015). In respect of the other countries where such processes operate, it highlights the matters that are taken into consideration and by whom, and the practicalities of undertaking such schemes as well as their broader goals and justifications. While there is little information about the effectiveness of such schemes, outcomes are discussed where presented. 

Methods 

We primarily explored two categories of country. These were Anglophone countries; and countries which have known well-developed social welfare systems, such as in Northern Europe, where one might expect consideration to have been given to vetting-type policies and procedures. The two categories of country were not necessarily mutually exclusive. 

Desk research exploring web-based material in the fields of social care, international recruitment practice and legal advice on vetting procedures, supplemented by rapid review of the published literature and the grey literature, was carried out during winter 2014-2015 (see Table I). The research areas fell into broad two themes: the purpose and aims of vetting paid staff and volunteers and job/volunteer applicants; and the procedures and practicalities of applying vetting schemes. 

A key word approach was taken to this scoping review. The inclusion criteria covered terms relating to checking processes and to the groups of people affected. Specifically they included adult vetting, criminal checks, disclosures, employment screening, police checks, pre-employment checks, protection, safeguarding, social care, vulnerable adults (and protection) and vetting. “International” and “European” were affixed to most of the above terms for search purposes. Exclusion terms included health checks, disability checks, occupational health and UK (the latter as we were familiar with this jurisdiction’s schema). 

The research was further informed by e-mail correspondence and face-to-face meetings with experts and practitioners in different countries to clarify matters, or to provide illustrations of systems in action. A purposive approach was adopted for identifying these additional resources. Data were also examined from a range of International and European bodies: including the European Platform on Ageing (EPA), the European Social Network (ESN), International Labour Organisation (ILO), and the International Network for the Prevention of Elder Abuse (INPEA). These were selected as bodies having experience and knowledge of good practice in employment (ILO) and in promoting best practice in and protection of vulnerable adults in Europe and globally (EPA, ESN, INPEA). 

Only literature written in English was included and, because regulations frequently change, only material produced in the last ten years was reviewed. Because many of the key terms (such as vulnerable, vetting and monitoring) are defined slightly differently by different countries, definitions are given at the relevant point of the paper. 

Findings 

In this section we bring together the review of the literature, the desk research and the contributions from the experts and practitioners. We found a number of Anglophone countries other than England that require organisations, whether private or public with a remit to work with vulnerable adults, to carry out disclosure checks on their staff and volunteers. In the USA and Australia, for example, this is organised at a state/territory level with individual areas having their own processes in place. Several countries were found to have compulsory checks for those working with children, such as Australia, Italy and New Zealand. Little evidence was found of legislative requirement for pre-employment criminal record checks for those working with vulnerable adults in most of the other countries searched. 

The purpose of vetting 

Different countries define or describe the purpose of vetting schemes in varying ways indicating distinctive emphases of what is important to them (we acknowledge possible changes of meaning arising from translation from the original language to English). For example, New Zealand legislation states the purpose of vetting is “to protect society’s most vulnerable members”, while in Norway it is “to contribute to safety for patients and quality within the health service, as well as to create trust in [...] personnel”. Mission Australia, a voluntary sector provider, adopts a twofold position: arguing for a solid framework that would both protect employing bodies and create a safe place for vulnerable people. This raises critical questions about where the balance of interest lies in developing schemes: between an organisation’s requirement to safeguard its own interests as a service provider, or in protecting those for whom it provides services. Under British Columbia’s legislation in Canada for vulnerable adults the aim of checking is to protect vulnerable people from individuals whose criminal record indicates they pose a risk of physical, sexual or financial abuse (British Columbia, 2014). 

Without exception a history of sexual abuse offences against children appear always to be as viewed as potential grounds for exclusion from care work or other forms of contact with children. In the USA, the Virginia Code contains a list of what it terms “Barrier Crimes, that automatically barred working in given circumstances”, and unusually this clearly identifies what constitutes such crimes. Of particular note is “abuse and neglect of incapacitated adults”, alongside such crimes as murder, manslaughter and extortion by threat. In Australia the types of harm that could be imposed on a vulnerable person are classified as sexual, physical, emotional and financial. In England automatically barred offences also include sexual abuse – the “autobars” (see McKenna et al., 2012). 

Who is being protected? 

Defining who is to be protected reveals another area for deliberation. The status of a child does not appear to be generally questioned as indicating vulnerability, but an adult’s vulnerability is defined variously by their physical, mental or intellectual health status (as in the Republic of Ireland and in Norway); whether their condition is long-term or temporary (Canada); by the health and care services they are using, such as domiciliary or hospital care; by the nature of their accommodation, such as residential care, sheltered housing, nursing home, hospital (see Northern Ireland); or by the type of contact with that agency. Additionally, some jurisdictions specify the need for assistance in the conduct of a person’s financial or other affairs (Northern Ireland and Tasmania) as denoting vulnerability. Australian Capital Territory (ACT) and Tasmania share a common definition with England in defining a “vulnerable person” in relation to their use of a regulated activity. Under the National Vetting Bureau (Children and Vulnerable Persons Act, 2012), the Republic of Ireland defines the person first: as being someone over 18 years of age who is suffering from a mental or physical condition, that necessitates their having a service that guards them against harm by another person, and/or because they need assistance with the activities of daily living, such as dressing, eating, walking, washing and bathing. It seeks to balance the rights of vetting subjects to protecting their good name, with the rights of children and vulnerable adults to be protected from persons who are likely to cause them harm. “Harm” under the Children and Vulnerable Persons Act 2012 includes physical, sexual or emotional exploitation of abuse of the person. Under British Columbia’s Criminal Records Review Act (RSBC, 1996) a vulnerable adult is defined as “an individual 19 years or older who receives health services, other than acute care, from a hospital, facility, unit, society, service, holder or registrant”. Subsequent guidance from British Columbia adds a relative or a person in a position of authority or trust as a person who should be scrutinised (British Columbia, 2014). 

Most of the legislation and guidance on safeguarding is declared to be in an attempt to protect vulnerable adults, usually in receipt of a care service, and children. However, there are other groups to whom the legislation applies in some jurisdictions. Examples include migrants, refugees and asylum seekers (in Tasmania under the Registration to Work with Vulnerable People Act, 2013) or those “detained in lawful custody” (in Northern Ireland, under The Safeguarding Vulnerable Groups Order, 2007). This adds a further dimension to the debate because of the form of guidance and training needing to be in place to ensure the law protects vulnerable people individually or as a group. 

While the purpose of vetting, as shown above, is about the protection of vulnerable people, judicial systems in some countries give more weight to considering the impact of such investigations on those who are required to disclose their criminal records. In such countries importance is placed on the rehabilitation prospects of offenders, and the impact that disclosure of their criminal history may have on their reintegration into society (Morgenstern, 2011).

Hohfeld

'How To Do Things With Hohfeld' by Pierre Schlag in (2015) 78(1/2) Law and Contemporary Problems 185-233 comments 

Wesley Newcomb Hohfeld’s 1913 'Fundamental Legal Conceptions as Applied in Judicial Reasoning' is a brilliant article.  A thrilling read it is not — more like chewing on sawdust. The arguments are dense, the examples unwieldy, and the prose turgid. As for Hohfeld’s project—the identification of fundamental legal conceptions — it seems to promise all the aesthetic charm of standard nineteenth-century juristic science.  Taxonomic activity will be happening. There will be classification. And jurisprudence by subdivision.

Oh, joy.

Yes. It’s that article. And yet, conceding all this (in fact, insisting on it), I hold to my claim: The full significance of Hohfeld’s article is hardly evident upon a first (or even second) read. And yet, as I try to show here, it can fundamentally alter the way one thinks about law. The taxonomic ambitions of Hohfeld’s style render his work suspect—at least to those who consider themselves postrealist or postmodern or post- whatever. I get it. I too am generally put off by this sort of thing. In my case, the aversion is a result of getting burned once too often: a legal philosopher proposes to offer a new classification scheme; he assures that great things will follow (the achievement of conceptual clarity is almost always involved); then after much arduous reading and repeated encounters with ethereal abstractions, nothing happens. Well, Hohfeld is not like that. Hohfeld redeems his conceptual taxonomy at great, though admittedly not always reader-friendly, length. He repeatedly shows the practi cal usefulness and theoretical power of his analyses even if he does not fully recognize or exploit all of their ramifications.

One of the most striking aspects of Hohfeld’s work is how much its architecture and arguments remain relevant—even bitingly so—today. Here I want to celebrate Hohfeld’s work and show how his thinking remains a powerful corrective to common errors in contemporary legal thought. More than that, I want to show how his work continues to serve as an extremely useful platform for intellectual, economic, and political insight into contemporary law. Where the full usefulness and power of Hohfeld’s analyses are not explicit, I will be pushing hard to show what can be done with his platform—specifically as regards its economic and political implications for law.

Strikingly, even the most objectionable aspects of Hohfeld’s work, for instance, his atomism, nonetheless yield extremely useful insights. Like any truly great work of legal scholarship, Hohfeld’s work not only helps us understand what it sets out to explore, but also serves to map out the problems it leaves unresolved. The upshot is that we learn not just from its successes but from its limitations. Hence it is that, more than a hundred years after its publication, there are many implications to Hohfeld’s work yet to be fully elaborated. 

To put it trenchantly, without Hohfeld, one simply misses a lot. In my view (and no, this is not the occasion in which I come out as a pragmatist), the great virtue of Hohfeld’s approach is not so much that Hohfeld’s analyses are right, but rather that they are useful and thought-provoking.

Accidents and Ambos

'ACT Workcover and the Failed 1997 Implosion: A Case Study of the Role of the Inspectorate' (National Research Centre for OHS Regulation Working Paper No. 91) by Patricia Healy comments

The failed implosion of the old Canberra Hospital buildings on Sunday 13 July 1997 resulted in an explosion which blasted masonry and steel debris beyond the 200 metre exclusion zone to where thousands of spectators stood watching on the shore of Lake Burley Griffin. A young spectator, Katie Bender, was killed instantly when struck by a fragment of that debris.

At the Bender Inquest the Coroner, Mr Shane Madden, described the implosion project as having failed systemically. He attributed the failure to: the Project Manager’s and contractors’ lack of appropriate competencies; the absence of input from independent engineers and explosives experts; inappropriate action by the ACT Chief Minister’s Office and Department in promoting the implosion as a public event; and failure of the regulatory agencies to properly discharge their functions.

It is clear, in retrospect, that the wholesale underestimation of the risk to public safety was a significant factor in this litany of failures. The public safety risk inherent in the implosion project as it was implemented, was unrecognized, discounted or underestimated by all the parties involved at all stages of the project. This study, with the great benefit of hindsight, examines why this occurred and how it affected the role of ACT WorkCover and those inspectors directly involved. Specifically it examines how the particular circumstances of the implosion project combined with the situation and practice of WorkCover to influence the inspectors’ assessment of the inherent risks and the exercise of their regulatory enforcement powers.

The 2nd Reading Speech for the Transparency in Government Bill 2015 (Vic) meanwhile states

This bill is an important step towards promoting regular public reporting of performance data by Victoria's ambulance and fires services, and Victoria's public hospitals. It establishes a new statutory framework to facilitate the regular release of ambulance and fire services' response times to emergency incidents; the mandatory annual release of important performance agreements, known as a statement of priorities, between the government and the boards of Ambulance Victoria, public health services and denominational hospitals; and the regular release of performance data by public health services and denominational hospitals.

The bill will deliver upon the government's commitment to ensure greater  transparency in the delivery of public health and emergency services. It will also address the need to improve the public reporting of emergency services' response times, as outlined in the 2015 Victorian Auditor-General's Office Emergency Service Response Times report..

The information required to be reported under this bill is about the performance of public services that are of critical importance to Victorians. Victorians have a right to clearly understand the performance of these services, and have a right to do so without having to go through a Freedom of Information process to access this information. This bill will ensure the enduring and easy access to this information for the public..

This  government is committed to providing greater transparency about the way that these crucial services operate. The men and women who work in these agencies perform an invaluable service for our community and we are grateful for it. The need for greater transparency arises precisely because their service is of such importance to Victorians. Victorians are entitled to understand how their critical services are performing..

The bill provides a framework for the release of three different kinds of information:

• Response times for Ambulance Victoria, the Country Fire Authority (CFA) and the Metropolitan Fire and Emergency Services Board (MFESB); 

• Statements of priorities agreed to by Ambulance Victoria, public health services and denominational hospitals; and 

• Performance data for public health services and denominational hospitals against the performance indicators in their statements of priorities.

Response times for Ambulance Victoria, the CFA and MFESB will be published online every quarter for prescribed emergency incidents, providing the 50th and 90th percentile response times to an emergency incident in a municipal district or local government area and thereby ensuring "that Victorians have an accurate impression of historical response times in their community". Total response times will be included, providing an understanding of the time it takes from the point at which the Emergency Services Telecommunications Authority (ESTA) receives a call for assistance to the first arrival at the scene by the relevant agency. 

The government acknowledges that response times are not the sole indicator of how effective or how well an agency is performing and that a range of factors can affect an agency's response time performance, such as geographical and seasonal variations. For this reason, the bill expressly clarifies that further information can be included in these reports, to promote greater transparency by contextualising the information and providing meaningful commentary. This will ensure that, if necessary for the public to clearly understand response times in their context, agencies will be able to provide the necessary contextual information to the public.

The bill recognises that there are likely to be times when the resources of an emergency service are devoted to addressing a major emergency, such as major bushfires during the fire season. In such circumstances, the  bill allows the minister to delay the publication of quarterly reports until a major emergency has been sufficiently addressed before reporting is resumed. The bill also recognises the potential impact of sustained and prolonged industrial action on the ability to collect and prepare response time data, and also allows for delayed publication in such circumstances. The  bill ensures that there is transparency when these exceptions are relied on by requiring the minister to publish a statement so that the public is aware that a report will be delayed.

The Speech indicates that the Bill will introduce

 a requirement for all statements of priorities for Ambulance Victoria, public health services and denominational hospitals to be published online by 1 November each year.

Statements of priorities are important documents that outline an annual agreement between the board of a health service and the relevant minister. They set out strategic priorities and agreed objectives for each financial year in terms of financial sustainability, services access and performance, safety and quality and service delivery, with accompanying performance indicators and performance targets.

Denominational hospitals are not legislatively required to agree to a statement of priorities, but where they choose to do so, the bill also requires their publication.

If a statement of priorities is not agreed in time to be published by 1 November for the relevant year, the bill ensures that the minister will publish reasons for the delay, and will ensure the publication of the statement of priorities as soon as practicable after agreement is reached.

Public health services and denominational hospitals with statements of priorities will be required to publish quarterly performance reports against specificperformance indicators in those statements.

These indicators are to be chosen from the prescribed performance categories, such as safety and quality performance or access and timeliness performance. In some cases, it will not be practical for certain performance indicators to be reported against on a quarterly basis. For example, data for a particular performance indicator might be collected by an independent contractor on a yearly basis. The bill enables the minister to specify an alternative reporting timetable, and requires publication of the reasons for the variation.

Where a public health service or denominational hospital has not agreed on a statement of priorities, the bill facilitates the reporting of health performance data by allowing the minister to publish a quarterly performance report against the performance indicators specified in the notice issued by the minister. If the public health service or denominational hospital later agree to a statement of priorities, the minister will publish a quarterly performance report based on the performance indicators in the agreed statement of priorities and that have also been specified in the notice issued by the minister.

The devil is in the detail, with the Speech indicating that minister responsible for administering the Health Services Act 1988 (Vic) will be permitted to delay reporting of hospital performance data in cases where it would unreasonably divert resources from a major emergency (ie the escape clause increasingly used by Commonwealth agencies in relation to the Freedom of Information Act) or as a result of prolonged or sustained industrial action.

Fiduciaries

'Accommodating Loyalty' by Andrew S. Gold in Paul B. Miller and Andrew S. Gold (eds.) Contract, Status, and Fiduciary Law (Oxford University Press, 2016) comments

 Legal and extra-legal conceptions of loyalty often diverge, most notably in fiduciary law. Some consider this divergence problematic because they see loyalty duties as moral duties, or because they see loyalty as a moral virtue. This chapter raises doubts about a moralistic view of fiduciary loyalty, in part due to difficulties in legal enforcement. Rather than seek to bring the law into a closer fit with moral understandings of loyalty, this chapter will instead suggest that the law should accommodate extra-legal conceptions of loyalty – that is, it should make space for loyal individuals to take on obligations that match their understanding of what it is to be loyal.

'The Collective Fiduciary' by Lauren Roth comments 

Can fiduciaries be made to serve public goals? The movement under the Patient Protection and Affordable Care Act (‘ACA’) towards universal access to health insurance requires us to focus on the fiduciary relationships between large organizations providing access to healthcare and the populations they serve. These relationships have become a collective undertaking instead of a direct, personal relationship.

In this Article, I introduce the concept of the collective fiduciary in response to the shift towards uniform, national goals in the realm of health insurance and healthcare. Only through a collective approach can we hold fiduciaries accountable for the welfare of many instead of one or a few individuals. While other scholars have focused on the individual whose fortunes or health are controlled by a fiduciary, this has made it difficult to collect information about fiduciary actions and obtain consistent and coherent decisions from fiduciaries. My argument here is that this is not a problem that can be fixed at the level of the individual fiduciary or individual beneficiary.

I examine the expansion of the role of the fiduciary as a result of growing demand for private welfare benefits in the United States. My concern here is with the expansion of health insurance and the administration of health benefits. If patients are denied benefits, then they are effectively denied access to service providers. In a space where the government has been, until now, largely absent both by choice and because of a lack of agreement on policy direction, individual decisions by fiduciaries add up to the only large scale policy existing for private benefits. Fiduciaries can and will undo the goal of expanding access to healthcare under the ACA unless ERISA’s fiduciary regime (the example I focus on in this Article) is altered. Though I explore several possible solutions, I ultimately argue that fiduciary duties are only meaningful when denials of benefit claims are supervised and capped by government actors. 

Patent Litigation

'The First Patent Litigation Explosion' by  Christopher Beauchamp in Yale Law Journal (Forthcoming)  comments

The twenty-first century “patent litigation explosion” is not unprecedented. In fact, the nineteenth century saw an even bigger surge of patent cases. During that era, the most prolific patent enforcers brought hundreds or even thousands of suits, dwarfing the efforts of today’s leading “trolls.” In 1850, New York City and Philadelphia alone had ten times more patent litigation, per U.S. patent in force, than the entire United States in 2013. Even the absolute quantity of late-nineteenth-century patent cases bears comparison to the numbers filed in recent years: the Southern District of New York in 1880 would have ranked third on the list of districts with the most patent infringement suits filed in 2014 and would have headed the list as recently as 2010.

This Article reveals the forgotten history of the first patent litigation explosion. It first describes the rise of large-scale patent enforcement in the middle of the nineteenth century. It then draws on new data from the archives of two leading federal courts to trace the development of patent litigation from 1840 to 1910 and to outline the scale, composition, and leading causes of the litigation boom. Finally, the Article explores the consequences of this phenomenon for the law and politics of the patent system. The effects of the litigation explosion were profound. The rise of large-scale patent assertion provides a new explanation for patent law’s crucial shift from common law to equity decision making in the middle of the nineteenth century. And at its height, the litigation explosion produced a political backlash that threatened to sweep away the patent system as we know it. Recovering the history of patent law during this formative and turbulent era offers fresh perspectives on the patent reform debates of today.

Governance, Business Lives and Identity

'Ideals of the Corporation and the Nexus of Contracts' by Ewan McGaughey in ((2015) 78(6) Modern Law Review 1057 asks 

What is 'the fundamental nature of the laws' that govern ‘public corporations in the United States and the United Kingdom’? This review article explores the 'nexus of contracts' view of the corporation, against its critique by Marc Moore in Corporate Governance in the Shadow of the State (2013). While the nexus of contracts theorists are usually thought to align the corporation to the private sphere, and seek to limit government interference, Moore suggests that corporations ought to be regarded as public. His analysis seeks to demonstrate that corporate laws of the United States and United Kingdom are essentially public. This article adds a further level, that the majority view of the corporation has been that it is a social institution. This stands in stark contrast to the nexus of contracts approach, whose roots lie in comparative German-American scholarship from the 1930s. In substance, this approach illegitimately privileges the claims to govern for a 'leadership' body of directors, asset managers, or banks, all of whom gain voice with 'other people's money'.

McGaughey comments

What is ‘the fundamental nature of the laws’ that govern ‘public corporations in the United States and the United Kingdom’? To basically similar questions, Frank Easterbrook and Daniel Fischel once famously answered, ‘Who cares?’ ‘Divergence between private and social interest,’ they wrote, ‘is rare’. So it did not matter what goals large corporations pursued: profit, social welfare, or charity. It did not matter whether corporations acted long-term or short-term, because a corporation was simply a set of ‘private agreements’. The only reasons to not enforce private agreements were force, fraud, lack of mental capacity, external effects on third parties, or maybe to alleviate poverty. But those goals were all achieved in the general law of contract, or tort, or specific regulation outside corporate law. Corporate law itself was just sub-category of contract law where, according to them, the aim is to enforce private bargains. Often the express terms of the ‘corporate contract’ run out. Then, corporate law makes default rules for what the parties ‘would have wanted’ (and only that) had they thought about it, and had they had no transaction costs. But if you officiously enquired about the fundamental nature of corporate law, the testy reply was just: ‘Who cares?’

Probably for this reason alone, but also for many others, Corporate Governance in the Shadow of the State is an important contribution to literature on ideals of business regulation. Evidently, Moore does care about the nature of the company. The basic question he poses is whether regulation of large listed corporations is more ‘public law’ or ‘private law’. His case studies are the major ‘Anglo-American’ models, represented by a Delaware ‘Inc’ (as modified by federal US regulation), and a UK ‘plc’. But the ‘private or public’ debate is not an end in itself. It is a route to the normative question of how large corporate structures ought to function: a profound question if, as Moore says, the ‘dominant academic paradigm’ does indeed ‘trickle down into the so-called ‘real world’.’

The Productivity Commission's report on Business Set-Up, Transfer and Closure  features the following findings and recommendations, including a proposal for a ubiquitous governance identifier (the DIN) -

Regulatory arrangements around business set up 

R 3.1 In principle, there should be a consistent approach to the taxation of business entities regardless of their ownership structure and size. The White Paper on the Reform of Australia’s Tax System should consider in particular: • the taxation of trusts used primarily for business purposes • the tax treatment of profits and losses across business types • the feasibility of a simpler entity for small business that would combine features of existing structures. 

R 3.2 Governments, particularly those at a state, territory and local level, should fully and promptly implement the leading practices and recommendations from the Commission’s previous reports on business regulation, including:

• Performance Benchmarking of Australian Business Regulation: Cost of Business Registrations (2008) 

• Performance Benchmarking of Australian and New Zealand Business Regulation: Food Safety (2009) 

• Performance Benchmarking of Australian Business Regulation: Occupational Health and Safety (2010) 

• Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments (2011) 

• Performance Benchmarking of Australian Business Regulation: Role of Local Government as Regulator (2012) 

• Regulator Engagement with Small Business (2013). 

R 3.3 Industry specific regulations that restrict business entry and the competitive operation of markets should be reviewed or removed, as recommended in the Harper Review. In reviewing their regulations, governments should assess whether they generate a net benefit to the community and whether they are the best way of achieving government objectives. 

R 4.1 The extension of protections against unfair contract terms to small businesses should be reviewed within five years. The review should include examining if the provisions are being misused by businesses to avoid contractual obligations. To facilitate such a review, the Treasury should ensure that adequate data collection arrangements are in place. 

R 4.2 Governments should increase the pace of reform to their land tenure arrangements, particularly focusing on those that may inhibit the establishment of new businesses and where overlapping types of tenure exist. Consideration should be given to the scope and duration of leases on Crown land, flexibility of land titles, native title determination processes and the accessibility of land tenure information. 

Regulation of new and innovative business models 

R 8.1 All jurisdictions should provide a legislative framework for fixed-term exemptions to specific regulatory requirements that deter entry by business models that do not fit within the existing regulatory framework. Such regulatory exemptions should be disallowable instruments and subject to public review prior to expiry. Legislative safeguards should be put in place to ensure the regulatory exemption does not lead to a material increase in the risk of adverse outcomes to consumers, public health and safety, or the environment. More generally, governments should: • continually review industry specific regulatory approaches to assess whether they remain relevant and provide a net benefit to the community and are the most effective and efficient means by which objectives can be achieved • ensure that regulation and regulators are flexible and adaptive in the face of evolving technologies and business models and properly funded for this task. 

R 9.1 The Australian Securities and Investments Commission, the Australian Prudential Regulation Authority and the Reserve Bank of Australia should, with appropriate industry consultation, develop an enhanced graduated framework and determine appropriate thresholds and prudential requirements for stored value facilities. The framework should be published to provide clarity to new stored value systems. There should also be an ongoing review process or indexation of thresholds to ensure that prudential regulation continues to be limited to ‘large and widely used’ facilities that pose a substantial risk to the wider payment system and/or consumers. 

R 9.2 The Payment Systems (Regulation) Act 1998 (Cth) should be amended to require a transparent process for the assessment of applications to designate payment systems. The changes should include a formal application process; the publication of determinations and the reasons for each determination; and a review process through the Australian Competition Tribunal. The process should be similar to that for the National Access Regime set out in Part IIIA of the Competition and Consumer Act 2010 (Cth). 

R 9.3 The Australian Government should amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) to enable the Australian Transaction Reports and Analysis Centre to regulate digital currency businesses for anti money laundering and counter terrorism financing purposes. 

R 9.4 Digital currencies, such as Bitcoin, should be treated as a financial supply for GST purposes. This would require that the definition of money be updated to include digital currency in both Division 195 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and relevant GST Regulations. Governments and entrepreneurial ecosystems 

R 10.1 The creation of entrepreneurial ecosystems cannot be driven by governments. Where a self-generated nascent ecosystem exists and there are demonstrable additional net social benefits arising from proposed government involvement in excess of those that will naturally occur from the ecosystem, limited support addressing specific ecosystem deficiencies could be justified. In order to minimise the risk that government support distorts incentives within the ecosystem or fails to result in net social benefits, assistance should: • be supported by an analysis of the ecosystem which identifies deficiencies and evidence that addressing these will improve outcomes • avoid targeting particular business sizes, models, technologies or sectors and focus on strengthening ecosystems, including networks and connections between all participants • be modest relative to the scale of the market and conditional on measureable private sector ‘buy in’ that exceeds government contributions • have a clear exit strategy established at the outset • be delivered by people with local knowledge and cross-sectoral skills • incorporate frequent monitoring against clear objectives, and be subject to independent and transparent evaluation. All Australian governments should, within three years, review existing assistance directed at the set up of new businesses to ensure programs — including those for start-ups, business incubators, accelerators and hubs — are consistent with the above approach. These reviews should not be conducted by agencies responsible for implementing the programs and should be published. Those programs that are not consistent with the above principles should be wound up. 

R 10.2 To support an entrepreneurial culture, and build future skills and capacity: • governments should use positive language to describe start up success and failure that is associated with ‘trying again’ and ‘learning by doing’ • state and territory governments should review the ways in which schools interact with the business and entrepreneurial community and any barriers to this happening • governments should not deny access to any assistance programs solely because an entrepreneur has had an unsuccessful business venture in the past • universities should review the length and structure of their degrees to accommodate practical entrepreneurial experience of students • universities should review their recruitment, performance assessment and promotion policies to ensure an increased focus on entrepreneurial capabilities and business experience. 

R 10.3 The Australian Government should commission a comprehensive and independent inquiry into the Australian innovation system, which is to include among other aspects: • the business collaboration, intellectual property management and research commercialisation practices of the public sector, including universities and publicly-funded research institutions • business incubators, accelerators and hubs in universities and publicly-funded research institutions • the public funding and provision of ‘transformative research’, including that by universities and publicly-funded research institutions. 

R 10.4 To support access by start ups and other businesses to publicly-funded data, governments should publicly release their data in formats that ensure privacy and confidentiality requirements are met. 

R 10.5 Universities should review their management of alumni networks with a view to maintaining links with alumni and enhancing the contribution of successful entrepreneurs among their alumni back into their universities and local entrepreneurial ecosystems. 

Access to finance 

5.1 Access to finance does not represent a barrier for most new businesses. Only a minority of new businesses seek finances beyond the financial resources of the owners, and most that do seek external finance obtain it. 

R 6.1 The Australian Government should introduce arrangements to facilitate crowd-sourced equity funding based on: • a single corporate form (the ‘exempt public company’) — as proposed by the Corporations and Markets Advisory Committee (CAMAC) in its Crowd sourced equity funding report — with the ability to revert to a proprietary company where the entity meets the legislative requirements following the exemption • the regulation of intermediaries as proposed by CAMAC, without the proposed restrictions on intermediaries having a financial interest in an issuer or on their fee structures, but with full disclosure of intermediary interests • a regulatory framework to protect investors, including cooling off periods, acknowledgment of risk and a cap on those investors that are not ‘sophisticated’ or ‘professional’ investors as defined under the Corporations Act 2001 (Cth) • an issuer cap of $5 million per year (that excludes funds raised from sophisticated and professional investors) and an investor cap of $25 000 per year and $10 000 per issuer as proposed in the Treasury consultation paper, but recognising that such caps are arbitrary and should be adjusted in light of experience with the operation of crowd-sourced equity funding. 

R 6.2 The effectiveness of employee share schemes and the costs and benefits to the broader community of their concessional taxation treatment should be reviewed by 30 June 2020. The review should consider: • the use of additional tax concessions for small start-up companies and the eligibility requirements to access these tax concessions • the removal of the cessation of employment as a deferred taxing point for equity or rights granted by an employer. 

R 6.3 The Australian Government should not require superannuation fund trustees to allocate funds to particular asset classes or investments, including venture capital or small businesses. 

R 6.4 The Australian Government’s tax incentive scheme — the Venture Capital Limited Partnerships — to increase the supply of venture capital, should be closed to new registrations while the Early Stage Venture Capital Limited Partnership should continue. Both the Early Stage Venture Capital Limited Partnership arrangements and the ongoing Venture Capital Limited Partnerships should be subject to an independent evaluation in 2017 as to the costs and benefits of these arrangements for the overall community. The evaluation should also consider extending the provision of capital gains tax exemptions for individual investors. If the Government intends to continue to provide tax incentives for venture capital following this evaluation, future arrangements should be: • back-ended to reward success and avoid tax minimisation • limited to seed stage or early stage venture capital, where there are likely to be greater difficulties in accessing capital • subject to an independent evaluation as to the overall costs and benefits after the scheme has been in place for an adequate period. 

7.1 While some new businesses are unable to obtain debt financing, there is no evidence to suggest that there are regulatory impediments restricting the ability of new businesses to access debt in Australia that require a policy response. That some businesses rely on credit cards as a significant source of debt finance can be viewed as evidence of a funding gap. However, the existence of a gap in the traditional financing market does not in itself indicate a need for government involvement and new lending models, such as peer to peer lending, represent innovations that could go some way to filling the gap. 

R 7.1 As identified in the 2014 Financial System Inquiry, the Australian Government should undertake a review of the participation of the lending industry in comprehensive credit reporting in 2017 with a view to determining whether participation should be mandated. The review should also consider extension of reporting to include the comprehensive credit history of businesses. 

R 7.2 Australian governments should not pursue credit guarantee schemes as a means of enhancing the ability of new businesses to access debt finance. 

R 7.3 Governments should cease programs that offer concessional loans to new businesses on the basis of their location or industry. For concessional loan programs provided to new businesses as a means of addressing social disadvantage, clear and persistent economy-wide net social and economic benefits should be able to be demonstrated. In the absence of these benefits, these programs should also cease. 

Voluntary business exits 

R 11.1 In line with recommendations from the Harper Review, the Australian Competition and Consumer Commission should combine the formal merger clearance process and the merger authorisation process, and remove unnecessary restrictions and requirements to improve the efficiency and effectiveness of business transfer processes. 

R 11.2 The current small business capital gains tax concessions should be rationalised. The White Paper on the Reform of Australia’s Tax System should consider: • the recommendations of the Henry Tax Review relating to small business capital gains tax relief with a view to the effectiveness of implementation, avoidance of unintended consequences and ensuring consistency with broader tax policy • the relationship between small business capital gains tax relief and retirement incomes policy for small business owners. 

R 11.3 Governments should confine their involvement in business succession planning to raising the importance of this issue publicly, ensuring the provision of high quality, accessible information on relevant regulatory issues, and ensuring government processes are as timely and inexpensive as possible with appropriate cost recovery.

Business restructuring 

13.1 The current culture, incentives and legal framework around voluntary administration inhibit its effectiveness as a genuine restructuring mechanism. 

13.2 While some specific reforms are warranted, wholesale change to the Australian insolvency system is not justified. In particular, several factors — including the costs of the process, the role of courts and changes to the roles of creditors and debtors — indicate that the overall costs are disproportionate to any likely gains from a wholesale adoption of chapter 11 of the United States Bankruptcy Code. 

R 14.1 The Corporations Act 2001 (Cth) should be amended such that, for an administration to continue, within one month of appointment the administrator must certify they have reasonable grounds to believe that the company (or a large component entity of it that may emerge following a restructure) is capable of being a viable business. If the administrator is unable to certify this, they should be under a duty (enforceable by the Australian Securities and Investments Commission) to convert the administration into a liquidation. 

R 14.2 The Corporations Act 2001 (Cth) should be amended to allow for a safe harbour defence to insolvent trading. The defence would only be available when: • directors of a company have made, and documented, a conscious decision to appoint a safe harbour adviser with a view to constructing a plan to turnaround the company • the adviser was presented with proper books and records upon appointment, and can certify that the company was solvent at the time of appointment • the adviser is registered and has at least 5 years’ experience as an insolvency and turnaround practitioner • directors are able to demonstrate that they took all reasonable steps to pursue restructuring • the advice must be proximate to a specific circumstance of financial difficulty, and subject to general anti-avoidance provisions to prevent repeated use of safe harbour within a short period. The defence would not attach to any particular decision and instead would cover the running of the business and any restructuring actions from the time of appointment until the conclusion of (reasonable) implementation of the advice. • If the adviser forms the opinion that restructure into any form of viable business or businesses is not possible, they are under a duty to terminate the safe harbour period and advise the directors that a formal insolvency process should commence. The safe harbour adviser may only be appointed in a subsequent insolvency process with leave of the court. 

R 14.3 Provision should be made in the Corporations Act 2001 (Cth) for ‘pre positioned’ sales. Where no related parties are involved, there should be a presumption of sale such that administrators can overturn sales only if they can prove that the sale was not for reasonable market value (in accordance with s420A of the Act), or if it would unduly impinge on the performance of the administrators’ duties. Administrators or liquidators should be allowed to rely on the pre-appointment sale process as evidence. If sales are to related parties, there is no presumption favouring sale and the administrator’s or liquidator’s examination of the sale process continues as normal. The administrator’s review should include checks that the sale has met existing regulatory requirements for related party transactions. In both cases, s439A of the Act should be amended to include requirements to disclose information of the sale to creditors. Where the sale (whether given effect before or after the insolvency appointment) is the result of advice received under the safe harbour defence, that defence should also apply against voidable transactions actions from administrators or liquidators. 

R 14.4 The small liquidation process detailed in recommendation 15.1 should include provision for small pre-positioned sales, consistent with recommendation 14.3. In the context of small businesses, the requirements of s420A of the Corporations Act 2001 (Cth), and investigations of related parties, should be applied proportionately in relation to determining the relevant market for the sale, advertising effort and reasonable price. 

R 14.5 The Corporations Act 2001 (Cth) should be amended such that ipso facto clauses that have the purpose of allowing termination of contracts solely due to an insolvency event are unenforceable if the company is in voluntary administration or the process of forming a scheme of arrangement. Amending legislation should make clear that the party experiencing the insolvency is in no way absolved of any other contractual obligations. External administrators should be given the ability to apply to the Court to require continued performance of a contract where the Court is satisfied that the supplier is attempting to avoid this moratorium, and that the continuation of the contract is in the best interests of the creditors as a whole. In circumstances where this moratorium could lead to undue hardship, suppliers should be able to apply to the Court for an order to terminate the contract. 

R 14.6 The Corporations Act 2001 (Cth) should be amended to create a moratorium on creditor enforcement actions during the formation of schemes of arrangement. This should be aligned with the approach used in voluntary administration. Courts should also be given the explicit power to lift all or part of the moratorium in circumstances where its application would lead to unjust outcomes. Corporate insolvency 

R 15.1 The Corporations Act 2001 (Cth) should be amended to provide for a simplified ‘small liquidation’ process. • This would only be available for those companies with liabilities to unrelated parties of less than $250 000. • To access small liquidations, directors should be required to lodge a petition to the Australian Securities and Investments Commission (ASIC) and verify that their books and records are accurate. • The primary role of the liquidator would be to ascertain the funds available to a reasonable extent, given a reduced timeframe. Requirements for meetings, reporting and investigations should be reduced accordingly. • The pursuit of unfair preference claims should be limited to those within three months of insolvency and of material amounts. The duty to pursue unfair preferences should be explicitly removed unless there is a clear net benefit and it will not impede conclusion of the liquidation. • Creditors would be able to opt out of the process and into a standard creditors’ voluntary liquidation, and ASIC would be able to initiate further investigation if it has concerns of illegality. Liquidators for these processes would be drawn from a panel of providers selected by tender to ASIC. Panel membership would be for a period of up to five years, with ASIC able to conduct tenders at regular intervals to ensure that demand can be met. ASIC should be empowered to hear complaints of practitioner misconduct and if the complaint is upheld, replace the liquidator. ASIC should be enabled to take disciplinary action, if warranted, against the discharged liquidator, including the suspension from participation in the panel or revocation of their registration. 

R 15.2 In instances of small liquidations where a liquidator is unable to recover funds to cover their own fee, and where the Australian Securities and Investments Commission (ASIC), is satisfied that the activities are not excessive, the liquidator should be able to apply for the balance of their fees to be paid through ASIC. • The existing Assetless Administration Fund should be renamed the Public Interest Administration Fund and its objectives and funding modified to reflect this new function. • To the extent that this requires additional funding, it should be raised by increasing the annual review fee for company renewals. Funding should also be available from the Public Interest Administration Fund in instances where ASIC initiates further investigations beyond those required by the small liquidation process. 

R 15.3 The Australian Government should instigate an independent review, to report by 30 June 2017, of the relevant parts of the Corporations Act 2001 (Cth), and the practices of receivers in the market, with a view to ensuring that: • The primary role of the receiver should be to protect the value of the property that is the subject of the secured credit. • The focus should be on the performance of individual loans. The appointment of receivers should not be used as a mechanism to manage lenders’ portfolios. • If there is a substantial group of unsecured creditors affected by the receivership, the receiver should have consideration of the impact of their actions upon the overall wellbeing or insolvency of the company. 

R 15.4 The Corporations Act 2001 (Cth) (the Act) should be amended such that where the stakeholders in a receivership (that is, unsecured creditors including employees and government authorities such as the Australian Taxation Office) form a committee of inspection and notify the receiver, that committee should have the right to basic information regarding the receivership process. This should include, but not be limited to: • a description of the proposed process • the results of the sale process • details of proposed and actual costs and disbursements. Receivers should be compelled to have regard to the views of the committee in a similar manner to liquidators under s479 of the Act. Considerations directly relating to protecting the value of the security should override any views of the committee. The committee should have standing under s425 of the Act to apply to the Court to seek relief in relation to the fees (but not actions) of the receiver. 

R 15.5 The operation of the Fair Entitlements Guarantee, in its entirety, should be reviewed in 2021 in order to monitor any moral hazard issues, potential abuse of the scheme and continued effectiveness of recovery arrangements. As part of this, consideration should be given to amendments to the Corporations Act 2001 (Cth) to allow the Commonwealth to play a more active role as a creditor. 

R 15.6 In addition to existing requirements for directors, section 117 of the Corporations Act 2001 (Cth) should be amended to require that, at the time of company registration, directors must also provide a Director Identity Number (DIN). A DIN should be obtained from the Australian Securities and Investments Commission (ASIC) via an online form at the time of an individual’s first directorship. In order to obtain a DIN individuals should be required to provide identity proof (based on the personal identification requirements for opening a bank account), and verify that they have read brief materials on directors’ legal responsibilities provided as part of the online registration. For existing companies, directors should be required to obtain a DIN. The DINs should be provided to ASIC at the annual review date for the company, as a change to company details. To enforce these requirements, ASIC should be empowered under section 205E of the Corporations Act 2001 (Cth) to ask a person who is a director to provide their DIN. There should be no lessening of the existing recording of, and means of accessing, director information. 

R 15.7 Following the implementation of the Commission’s proposed reforms to the insolvency system, the Australian Securities and Investments Commission (ASIC) should produce a Regulatory Guide targeted at small businesses facing financial difficulty. The guide should cover legitimate restructure and liquidation options and responsibilities, with a focus on the new processes designed to assist small businesses. ASIC should consult with the Australian Small Business Commissioner (or its successor), representatives of small business and the insolvency and legal professions in producing the guide. 

Personal insolvency 

R 12.1 The Bankruptcy Act 1966 (Cth) should be amended so that, where no offence has occurred, a bankrupt is automatically discharged after one year. Specifically, this should apply to restrictions relating to overseas travel, holding an office under the Corporations Act 2001 (Cth), employment within certain professions and access to personal finance. The trustee, and the courts, should retain the power to extend the time until the bankrupt is discharged for a period of up to eight years if there are concerns regarding the bankrupt’s conduct. Any extensions should be recorded on the National Personal Insolvency Index. The Australian Government should work with other governments and professional bodies to ensure that any regulations or other arrangements restricting the employment of bankrupts beyond the period of bankruptcy are justified according to specific and efficient policy objectives. 

R 12.2 The obligation of bankrupts to make excess income contributions to the trustee should remain for three years. The period of excess income contributions can be extended at the discretion of the trustee to up to eight years. If the period of bankruptcy is extended beyond three years, then excess income contributions should be required until discharge.