Senator CONROY (Minister for Broadband, Communications and the Digital Economy) (1:10 PM) —Can I say that we are guided by the question of practicalities more than the substance of what you are suggesting. I think, as I mentioned in my last contribution, there is a growing scrutiny by shareholders, the owners of companies, to actually express their view about corporate excess. As I said, we are guided by the practicality issue. The point you are making I am not actually necessarily disagreeing with—

Senator Xenophon —Did you get advice about loopholes?

Senator CONROY —The advice that I believe we received is that there is no loophole. In terms of the sentiment of what you are expressing, could I say that the point I made in my last contribution to Senator Brown is that the non-binding vote and the issue of directors who agree to excess not being dealt with by their shareholders is something that still falls short in this country. Directors who agree to bonuses whether they are currently in the non-binding parts of this or in golden hellos equally are also up for election. Shareholders and commentators that you describe who object to golden hellos have a very simple remedy. I agree with you that they are not yet showing the courage to follow up.

It is the same point I made to Senator Brown. Once a remuneration committee of a corporate in this country demonstrates it has lost touch with reality by agreeing to massive payouts or massive golden hello sign-on bonuses then it is time for the shareholders to express their views by voting against the re-election of said directors. It is only at that point, when the first director is actually voted down because of their role in a remuneration package, that the real message will go out to corporate Australia about corporate excess. I am all for that day coming fast. You might, if you wanted to be unkind, say that the chair of the remuneration committee of Telstra is not seeking re-election in the forthcoming Telstra annual general meeting. You may say the informal process of easing that individual off the board for having had a massive vote against it is working and some might say that that was how it should work in the corporate world. Personally, I think shareholders should have indicated upfront that they were not willing to support a board member who proposed that package and put shareholders in that sort of position. But until we get the clear and unambiguous statement from institutional investors that they are prepared to vote against directors who engage in handing out excessive, obscene salary packages, we will not have fully reached shareholder participation and shareholder democracy in this country.

So I think a lot is happening in this field. Has it gone far enough? I say the same thing I said to Senator Brown: no, but we are going in the right direction. We need debates like this. We need to understand that, while Australia has come out of the global financial crisis significantly ahead of all other countries in the world, it is because our governance of our financial institutions has been better. Our ASICs, APRAs and other corporate governance structures in this country have been better. Are they perfect? No, but that is why we need to take steps like this and that is why we need the Productivity Commission report to come.

There is no question that there is still much more to be done. But for those who want to oppose Senator Xenophon’s sentiments in the future, which includes every person on the other side of this chamber, the way for this to be resolved is for the corporate community to take the matters in hand themselves and for institutional investors to stand up to the club and stand up to the directors, sending a message: if you do not want greater, tighter, more onerous regulation—which they all say they do not want—start acting with some self-restraint. Start exercising the powers available to you in the re-election of directors in boards. If you want to avoid the parliament introducing more and more regulation in this area, start behaving responsibly and exercise your fiducial duties by knocking over directors involved in these sorts of obscene handouts.