Mr O'KEEFE (9:58 AM) —During my opportunity to speak this morning on this Appropriation Bill, I want to refer in particular to the appropriations that are made available for the carrying through of the government's role in what I now describe as the waterfront fiasco. I describe it in that way because I do not think it is appropriate for the national government of Australia to involve itself in the activities of a company which strips its assets in order to leave the employees in a holding company that does not even have the money left to cover their entitlements. I do not believe it is responsible for the national government to be involved with a company which breaks the government's own employment laws, as has been found in both the Federal Court and the High Court. I do not think a company that employs balaclava clad security guards with guard dogs to patrol the workplace is an appropriate organisation for the government to be linked with. I do not think that is the way we do business in Australia, and most Australians feel the same.

Were I to take the time this morning, I could go through a number of very interesting facts about actual performance on the waterfront, compared to the total deception that has been perpetrated from the box on the other side of the House, particularly by the Minister for Workplace Relations and Small Business (Mr Reith). I give just one example. In late 1996, the Patrick workers employed in Melbourne entered into an enterprise bargain—co-signed by the MUA and Corrigan—with their employer. It was a normal enterprise bargain, the same as operates in any other business. That enterprise bargain contained a number of provisions. One was an agreement that the employees of Patrick in Melbourne would work to certain productivity targets. They would change the work practices and seek to achieve certain productivity goals. If they reached those productivity goals—that is, if they did more work than the enterprise bargain provided for them to achieve during the three-year period—they would be paid a bonus. The Patrick workers in Melbourne achieved their productivity bonus for 38 of the 42 weeks leading up to the night they were sacked and locked out.

The minister for workplace relations has stood here in the House talking about people getting $90,000 a year for 15 hours of work, when the award rate is $36,000, and anything on top of it is overtime and other pay according to their conditions. The minister has talked about the lies or misinformation that have been perpetrated—never once telling anybody in Australia that the Patrick workers in Melbourne achieved their productivity bonuses agreed to by Corrigan for 38 out of 42 weeks leading up to the night they were sacked.

There are a number of issues we could cover in this debate, but I particularly want to go to something else that has taken my attention: what on earth has gone on behind the asset stripping and the ownership of these companies? We all understand that what Patrick did was separate its normal company operations employing wharfies by setting them up in a holding company, making that the labour company and employing the workers there. You might ask: why would you even do that? Why would you put your employees in a separate company? Answer: so you could strip the assets out of it, leave it with no money, and leave them stuck out there employed by a company that has no money to pay them when you terminate their employment. That was the first part of the arrangement.

Then you ask: who is doing this? Who actually owns Patrick? Suddenly you find, when you look at the corporate securities information, that Patrick is not Patrick. It is another company—a company called Lang, the Lang Corporation—that owns Patrick. So it is the Lang Corporation that is actually making the decisions that run Patrick. But who owns Lang? And here is the rub. When you consult corporate information as to who owns Lang, you find that the majority shareholder is not Scanlon or Corrigan or any of those characters; the majority shares are owned by a consortium of financial institu tions. They own 38.2 per cent of the shareholding—the majority share. Those financial institutions include organisations such as Westpac, BT, Chase Manhattan, AMP, National Mutual, WorkCover Victoria, Permanent Trustees, the National Bank and ANZ Nominees.

So you then ask: why on earth would Australia's premier financial institutions be all holding shares in a stevedoring company that is not performing very well? These are supposed to be the smart money men of Australia. And we have seen the Patrick share price fall over the last couple of years from $3 a share to $1.80 a share. Any smart investor out there says, `Hang on. If the share price is going down and the company is not making profits, this is not a place for me to be with my money. I should sell my shares and go and put the money somewhere better.' That would be the normal pattern of events. When you look at AMP in particular, that is exactly what they did. In July last year they sold their shares and ceased to become a significant shareholder, as did BT.

Another little twist: in January this year they bought the shares back again, as did a whole lot of institutions buy back into a dog stevedoring company. That leads to several inferences which I am going to trace through in a minute. I looked at this and thought: what on earth are the financial institutions doing being majority shareholders in a company which behaves like this, especially when those very same institutions took exception to the way Coles Myer was conducting its affairs and intervened in the affairs of Coles Myer, demanding broad restructuring, replacement of certain people and a completely new corporate plan? They did not sell their shares and go away; they actually moved in and demanded that Coles Myer lift its game.

In the case of Pacific Dunlop, these institutional investors also moved in and demanded that the show change its game. But here we find that the majority of shareholders in a company which has broken the government's laws—left employees stripped of assets, employed security guards wearing balaclavas and used guard dogs—have actually bought more shares. You have to say to yourself: what the hell is going on here?

So I wrote to all these organisations and asked them questions about their shareholdings. I make this point. Many of these companies hold superannuation funds. Every worker in Australia at the moment has seven per cent of their pay go off to these superannuation funds. This is workers' money going into companies which are investing in a show that does over the workers like this. There are ethical issues here about how a company that holds billions of dollars of workers' superannuation funds should behave in relation to workers. I have been a passionate advocate of compulsory superannuation, but there are responsibilities that are incumbent on the companies holding these funds. So I wrote to them and said:

Whether or not it is superannuation or other publicly raised funds, I believe that institutions which hold this capital have a duty to ensure that the companies they invest in conduct themselves appropriately in our economy.

I assume that as substantial shareholders in Lang, the `institution investors' are represented on the board and have been parties to, or aware of, the decisions taken in the lead up to the events which occurred. If so, warning bells should have rung—

and this is to the managing directors—

and you or someone senior in the organisation should have been informed.

And I asked the question:

Am I right to assume therefore, that the Patricks scam was conducted with the approval of the institutional investors or have they collectively turned a blind eye to corporate conduct which is unbecoming in our community.

. . . . . . . . .

Obviously it does not remain as just a question of prior knowledge of the Patrick corporate activities.

That is around the conspiracy case. Remember, many of the characters had prior knowledge that these men were going to be sacked—and there has already been the banking syndicate involved in this in the Federal Court and the High Court; that has all been flushed out—whether or not they put money in or were financial institutions which conspired to hold the share price up. The point is this: the government's worst nightmare in this is that these institutions may have lost their nerve and said, `We don't want anything to do with this, we don't want to be a shareholder of an organisation that does these things, we don't want to be named in the federal parliament'—exactly as is happening now.

If they had said to themselves, `We don't want to be in any of this,' the smart thing to do would be to sell the shares, to get out of them. Why would they not do that? Because the government's worst nightmare is that, if those people sell those shares and the share price falls, the controlling interest in Patrick would then be bought by somebody else who may even be friendly to the MUA. It could be a P&O, it could be a Sealand or it could be a Lindsay Fox. It could be another transport operator who buys the shares and says, `We can do business with the MUA.' That is the government's absolutely worst nightmare. That would mean the collapse of the whole waterfront fiasco.

I believe that a number of these financial institutions had prior knowledge and actually agreed to support the share price. That is why, when they have been put under pressure, they have stayed in there. I will say a bit more about that in a minute. So I wrote to these managers back on 22 April and said to them:

Obviously it does not remain as just a question of prior knowledge of the Patrick corporate activities. They are now very public knowledge and the question which then follows is what steps the institutional investors have taken since to insulate themselves from becoming implicated, by virtue of their shareholdings.

I will not go through all them in the parliament, but I have had replies from six or seven of these organisations. You would reckon they had all rung each other up and worked out exactly the same script to send to me.

In order to reinforce that point, let me refer to one of the replies which I received. I refer to the reply from the Victorian WorkCover Authority. They all said the same thing, so this is representative. WorkCover said that external fund managers are appointed. They say, `As a financial institution, we put the money with an external fund manager; we don't involve ourselves in what goes on in the companies we are investing in.' Remember Coles Myer; remember Pacific Dunlop? They have all said to me, `We don't involve ourselves in what goes on in these companies. We give the money to an external funds manager and he operates it on our behalf.' WorkCover, in their letter to me, stated:

In the general course of events, the Authority—

this is, WorkCover Victoria—

does not ask for detailed information about the breakdown of companies in which the fund managers invest . . .

They all say they are not represented on the board and they all say they take no part in the active decisions of the operation. It is a uniform response from them all. I have to say that it is an extraordinarily hands-off investment strategy for companies which otherwise feel no compunction at all about intervening as they did in the example of Coles Myer and Pacific Dunlop.

I then look, for instance, at AMP. I find AMP a particularly interesting case, because anyone who follows this stuff will tell you that AMP are what you call a quantitative investor. They don't just rush in and buy shares somewhere and then sell them, and then buy them again, and in and out. AMP sit down and do a strong actuarial analysis of a company. They take a long-term view about how it is likely to perform, they buy their shares on that basis and they stick with their judgment. That is what you call a long-term, quantitative investor.

Some years ago, AMP bought into Lang and they stayed there. But last July, they made a decision that there was no point staying with them, so they started to wind down their shareholding. In winding down their shareholding they were opting out, and that is normal behaviour for AMP. But what did AMP do then? In January this year, absolutely out of context with anything else they do, they bought back in. For some reason, they bought back in.

The inference is this: AMP were absolutely reliant on the support of the government for their demutualisation. One of the biggest issues going on for AMP at the moment is the support of the government for the demutualisation of the organisation, with billions of dollars involved.

The question remains: was there a meeting at any time between AMP and the Prime Minister (Mr Howard), or AMP and the Treasurer (Mr Costello) where AMP were given the message that they were required, in order to have government support for the demutualisation, to buy back into Lang Patrick and support the share price of Lang Patrick? That is the question that now arises out of the corporate behaviour of AMP in this whole operation.

As I said earlier, the role of the financial institutions in this whole scam is going to become a central focus during the next few weeks and, in particular, the role of AMP and whether those meetings took place between the Prime Minister and AMP in the lead-up to the conspiracy which led to the sacking of the workers. They are questions that will be asked in this parliament during the next few weeks.