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Tuesday, 25 November 2003
Page: 22804

Mr JENKINS (9:09 PM) —Executive salaries continue to grow at a greater pace than the wages of ordinary working Australians. According to an AFR survey this month the remuneration of CEOs increased by 7.3 per cent, while according to the August 2003 Bureau of Statistics figures AWE grew by 6.1 per cent. There has been great interest in this in the media. Earlier this month the Age ran a supplement under the heading `Power salaries: a special report'. It was very interesting to look at the listing it had of executive salaries by company performance. I was intrigued to see that a number of companies saw their share prices decrease, yet exorbitant salaries and remuneration were given to their top executives. For instance, in AMP, where the share price has dropped by 68 per cent, the top five executives earned—as reported in the annual reports, under the new ASX rules—$6.1 million, $3.3 million, $3.2 million, $2.8 million and $2.1 million.

Often when these sorts of issues are raised in this way people say that this is about the politics of envy. It is not about the politics of envy; it is about the fact that ordinary Australians want to know how people can earn those great sums of money when the performance of the companies that they are running seems to be so paltry and pathetic. It is interesting that, when asked to justify these types of salaries, we get responses like that of Don Argus, the Chairman of BHP Billiton, when he was talking about the remuneration package of $6.5 million this year for the new chief executive, Chip Goodyear. He said:

He's got to be on top of financial issues, legal issues, he's got to have technical knowledge, and he's got to be able to lead 38,000 people of mixed cultures in 30 countries around the world and relate to 316,000 shareholders ... To relate his salary and his accountability back to a basic wage is a nonsense.

As the Age report went on to say:

But what about comparing what Goodyear earns with the Prime Minister? Or a High Court judge? Or the head of the Treasury?

When we get those sorts of comparisons, that sort of explanation pales. Of course these people lead great bureaucracies, but that cannot justify the types of remuneration packages that we see. Today we have received the annual report of NAB. It indicates that Frank Cicutto's package has almost trebled. He now has a remuneration package worth $7.77 million. The report does the mathematics and suggests that the latest package is about 203 times the average weekly earnings. It means that Mr Cicutto earns $21,300 a day. What does that mean when we equate that with average earnings? Here is one man earning in one day what an average Australian earns in a year.

These sorts of things need to be looked at. In the past I have called upon the government to have a serious inquiry into why these types of remunerations should be justified. It has to go beyond self-regulation. There is no use in the Prime Minister, on occasions when he feels inclined to, suggesting that some of these remunerations are over the top. In May this year, when the Prime Minister was reflecting back on payout of the former BHP Billiton CEO, Brian Gilbertson, he said: `I think it is too much.' In 2000, when the Prime Minister talked about the payment made to AMP's George Trumbull, he said: `There's no way you can defend an arrangement of that magnitude. No way at all.' It needs leadership to be shown by the federal government. It needs action. It needs the sorts of measures that have been seen in other jurisdictions.

Why don't we have a look at removing the corporate tax deductibility over a certain limit for executive salaries? Why don't we ensure that there is proper and even more full disclosure to shareholders? If we are going to have a great shareholders' democracy, why don't we make sure that the decision-making processes of companies are transparent? And when we are talking about the remuneration of chief executive officers and executives of these companies, why don't we make sure everything is revealed so that shareholders can have a comment on what it should be? It is not good enough to suggest that companies will self-regulate to make sure that these things are done in an appropriate way; it really requires the leadership of the Australian government. It really needs an inquiry. (Time expired)