Mr RIPOLL (6:01 PM) —The Corporations Amendment (Repayment of Directors' Bonuses) Bill 2002 could be called the One.Tel bill, because it is really about trying to deal with the situation of corporate excess getting out of hand in this country. When we talk about corporate excess getting out of hand in this country, it is not so much a matter of things that have been going on for 20 years but a matter of things that have been going on in the corporate world more recently. There has always been corporate excess to some extent, but it is the corporate excesses that have taken place since the One.Tel collapse, HIH, Ansett, the Enrons of the world and so forth that we are talking about today. That is what this bill is about.

When government speakers come into this place—and I am sure there will be many more on this bill—they will talk about what Labor did or did not do in its 13 years in government or what it should have done and so forth. But very little time will be spent dealing with the real issues at hand: how effective this bill is and what it will do in particular. I want to tell some government members, before they come back into this place to speak on this bill, to have a look at where this bill originated. Who was in power and let the reins of corporate governance and accountability go? Who had their eye off the ball and allowed these things to take place? We could look at a whole range of issues there—not just the corporate excesses but also HIH Insurance and the body responsible for that, APRA. Who had their eye off the ball? Who was on watch when these things took place? It was not Labor on watch; it was the Liberal Party that were on watch, and it was under their governance that these things took place. So let us not be under any misapprehension as to who should claim responsibility or who should be blamed for these things, but let us look clearly at where we are at today.

We are here to talk about a bill, the purpose of which is to permit liquidators to reclaim unreasonable payments made to directors of insolvent companies. It is about those payments, shares, options and severance pays that are made to company directors in the dying phase of a company before it becomes insolvent, or while it actually is insolvent and perhaps still trading—unbeknownst to its shareholders or the rest of the community. That is what this bill is about. It is supposed to assist in the restoration of funds, assets and other property to companies in liquidation, and it should be for the benefit of the employees and the creditors of that company. It is certainly not, as the member for Indi tried to pass off in this House, some sort of goodwill bill towards workers and their families. I certainly do not see too much goodwill in any of the actions of this government when it comes to helping out workers who may have invested 20 or 30 years of their lives in a company that goes insolvent, and who find that there is no money left in the coffers and that they are the ones who will lose out. I have certainly not seen any bill introduced in this place that would deal with that, even though for years Labor has had on the table a private member's bill that deals with these things. The government refuses to bring that bill on because it does not want to deal with those real issues.

On the one hand, we can talk about this bill and what it purports to do. It is extremely weak in its ability to actually do those things, but at least it is a step in the right direction. As with a lot of issues that revolve around this type of bill, the government is not so keen on introducing such measures and is always dragged to the table kicking and screaming. This has been no different. After the collapse of One.Tel, in June 2001 the Prime Minister announced that there would be an amendment made to the Corporations Act that would enable the recovery of bonuses paid to directors of those specific companies that later collapsed—so some time has elapsed.

What the government supposedly does in this bill is to reclaim what are considered to be unreasonable director related transactions made within a four-year period of a company appointing a liquidator. The particular question in this bill becomes what you would define within it as being unreasonable director related transactions. Under schedule 1 of the bill, such transactions may have the following features:

The problem with that definition is that it is not considered to be unreasonable for a whole range of those things to take place; it depends on how one would define unreasonableness. The problem then, of course, is that it goes to a court to make a judgment. That is not a problem in itself, but for the test to prove that a transaction is uncommercial, whether or not it is purely objective, the liquidator must prove that it was provided by the company and was of such magnitude that it could not be explained as being normal commercial practice.

If you look at that and ask, `Okay, what would be normal or what would be reasonable?' it is pretty hard for the average person in the street—it is certainly hard for me and, I think, for many other people—to work out what is reasonable in the corporate world. If you look at the past, over many years top corporate executives have been paid pretty well. I have an article here from an October 2000 Weekend Australian. It lists what is called `the million buck club'—probably a better term would have been `the million dollar club'—and it includes major organisations in Australia. I will not read them all out—there are quite a few—but it lists firms such as Coca-Cola Amatil. David Kennedy, its former CEO, got an annual package of about $1.6 million. These packages do not always include options, bonuses and all sorts of other incentives which, in dollar terms, are often two, three, four or even 10 times the size of what these executives actually get paid on a yearly basis. James Hardie's CEO Peter Macdonald got $1½ million. Telstra's Ziggy Switkowski got $1.654 million, including $400,000 in bonuses.

Ms Hoare —And Telstra's price is falling.

Mr RIPOLL —True, that certainly is a big issue. It seems to be almost a reverse theory in the corporate world that, as the share price falls, as the assets of the mums and dads out there fall, the corporate executive pay goes up. It is a bizarre world, but that seems to be the way it works. Westpac's David Morgan got $1.72 million, and Qantas's James Strong got $2 million. They all seem to be around that same mark. The reason I bring these figures to the notice of the House when talking about excesses is that I want to raise the issue of One.Tel. Jodee Rich being paid $7.5 million in the same year that these other guys, most of whose companies were holding their share value, if not increasing it, were paid around the $1.5 million to $2 million mark. Jodee Rich got $7.5 million, including a $6.9 million bonus—a bonus for what, we would all ask. Brad Keeling got $7.5 million and the same sort of bonus—a $6.9 million bonus. If we were to make a comparison, I think we could easily say that these bonuses were unreasonable, but certainly, in the view of the directors of that company and the people who supported them, they were not.

We can see that the definition of corporate excess may be a real problem. Since that time, only a couple of years ago, we have seen truly spectacular excesses. More recently, in September 2002, we saw the greatest golden handshake in Australian corporate history with Suncorp's chief receiving over $30 million in his final term. That, to me, is unreasonable. It would have to be unreasonable, in terms of what that person was actually worth. That does not include bonuses during the year of $18.3 million, including termination payouts. Then there is the sort of money that Paul Anderson got in his last year at BHP Billiton. Ross Wilson departed with $9.2 million from his last year of heading up Tabcorp. He also happens to be the owner of Sydney's Star City Casino. So when the government comes in here and says, `Labor didn't do anything about this when it was in power,' you just need to look a little closer at the years and the dates of this corporate excess. There truly is an excess under this government's reign, not under ours. There were excesses, but not of the magnitude of those that have taken place under the liberalised approach of this government towards these types of activities.

There are many newspaper articles dealing with this issue, because it hit a real note with the Australian community. Those in the Australian community were asking themselves fairly basic questions such as: how is it that company executives who head up major firms in Australia get extra bonuses when the company is going bust; and how do they get those bonuses of incredible amounts of money when that company then goes into liquidation and there is no money left in the coffers to pay the creditors, the superannuation of its work force or the entitlements that people might have accrued for 20 or 30 years? They lose a lifetime of investment in making the wealth for that company partly on the basis that the corporate executives get these massive payouts, golden handshakes and quite outrageous bonuses.

Again, in reviewing this bill, it does not go close enough to dealing with these corporate excesses, and we will find that it is extremely lacking in any real ability to deal with corporate governance and accountability. The corporations will be able to quite easily move around this bill. There has been wide-ranging criticism not just from members on this side of the House but also from the corporate world, which has an interest in corporate governance and accountability. The corporate world is saying that this bill simply does not go far enough, that it is a weak attempt by a government that is continually dragged screaming and kicking to the table when trying to do something about its corporate mates and reining in those excesses.

I listened to the speech from the member for Indi. Her view that this was some sort of longstanding norm within industry and within the Australian corporate world is completely wrong and does not focus at all on the ability of the government to do something solid about this. If we look at some of the criticism, we see that it relates particularly to the fact that the Australian government's bill comes in no way close to what is happening in the UK and the US. We know from recent happenings that this government is particularly interested in the way the US government decides to do things. Maybe it should take a closer look at what the security and equity commission in the US has proposed in its rule changes and in the things that it has put forward to try to deal with the same excesses in that country—for instance, relating to Enron. Enron's executives who were on the way out when the company was failing and falling apart got bonuses, payouts and other options worth around the $1 billion mark, which is completely outrageous for a company that they knew was going under. Its top executives would have known, and they just decided to pilfer the coffers and fill their pockets. The US has reacted in the way that this government should react here—that is, it did something firm in trying to deal with it.

The US has proposed a requirement that a managed fund disclose in its registration statement the policies and procedures that it uses to determine how-to-vote proxies relating to portfolio securities. This would require a managed fund to file with the SEC and make available member information and also the funds proxy voting record. The US will require a managed fund to disclose in its annual report to members information regarding any proxy votes that are inconsistent with its proxy voting policies and procedures. They will also require investment advisers who exercise voting authority over client proxies to adopt and implement policies that are reasonably designed to ensure that adviser proxy votes are in the best interests of clients. They will ensure that information on those procedures and policies and how clients may obtain that information is made freely available. The US legislation tries to deal with it in an open manner to rein in those corporate excesses.

The UK has taken very strong steps in trying to put some best practice into its legislation. This has included the formation of the Institutional Shareholders Committee, which consists of the Association of British Insurers, the National Association of Pension Funds, the Association of Investment Trust Companies and the Investment Management Association. They have put forward best practice principles such as maintaining and publishing policy statements of firms in respect of the companies in which they invest and actively engage, monitoring the performance of and maintaining an appropriate dialogue with those companies, intervening where necessary and evaluating the impact of those policies. They have gone a lot further than this government in making sure that there is a transparency in the corporate world.

Transparency is something that is expected by all Australians and it should be expected by this government. While this bill takes an initial step, I would recommend that the government refer this bill to the Senate economics committee. This would allow aspects of the bill to be fully examined and allow exploration of what possible amendments could be made to improve the Corporations Act in order to increase the accountability arrangements governing executive remuneration. I think there is a huge expectation in this country because of the collapses of One.Tel, HIH and Ansett. We have seen a great deal of damage done to the credibility of corporate governance and accountability in this country, and it will take some years to repair.

It is the role of this government to take those steps to repair the damage and rebuild the confidence of the Australian investing community, those ordinary mums and dads, the battlers out there—we do not often hear too much about them now from the government—who invested their life savings and were then completely ripped off in terms of their losses after the collapses of companies like HIH and One.Tel. It is a disgraceful period in Australian corporate history and it is one that should not be repeated. It does not need to be repeated, because the government has the ability and the power through legislation to rein in those corporate executives.

I suggest that the government stop blaming Labor, stop blaming everybody else, stop going back in history and saying, `What did you do when you were there? Why didn't you do this? Why didn't you do that?' Get on with the job now; you have got it in your hands now. We have some legislation. Take it by the horns and do something with it. Do not blame everybody else for what is clearly the government's responsibility in this term. It is something that happened on their watch, it is something that ought not to have happened and it is something that can be addressed. The rest of the world is acting. The US is acting. The UK is acting. It is time that the Australian government took some action rather than concentrate all of its efforts in other areas.