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Monday, 20 June 2011
Page: 3238


Senator BOB BROWN (TasmaniaLeader of the Australian Greens) (10:06): The Greens have a long history of calling for a curb on executive remuneration. I cannot go beyond former Prime Minister Rudd's description of some of the packages going to CEOs in 2008 as 'obscene'. And obscene they are. An example of that is Rio Tinto's Tom Albanese, who has over $9 million in the latest package, which is a 328 per cent increase in one year. Ask some of the workers in Rio Tinto how they would like a 328 per cent increase, let alone a multi­million dollar package. I am sure we would find that they would all like that sort of consideration. Don Voelte, who is about to go back across the Pacific from Woodside, is getting over $8 million. It would be interesting to see if there is a severance package there. The Commonwealth Bank's CEO is getting over $16 million; that is a 75 per cent increase in one year, and this is a bank that still charges pensioners $2 to withdraw $20 if they have their account with a rival bank. Then there is BHP Billiton, where Marius Kloppers is the recipient of $11 million.

The community has a right to be very concerned about the growing gap between the richest and the poorest in this country. It is something we Greens speak a lot about on a global basis. The number of people on the planet who cannot feed themselves—who are hungry—at the moment has gone from 800 million to 1,000 million this year, but we are here talking about executives who are on packages of more than $2 million, $5 million, $10 million or $15 million in one year. All of us are born onto the planet equal, but human society—and that includes in democratic countries—is allowing the growth of an egregious difference in the way we and our fellow human beings, inside and outside this country, are treated.

The average CEO in Australia earns over 100 times the average wage, and executive remuneration is going up faster than average wages. That means the average CEO in this country is taking home each year more than 100 times the income of people who are on the average wage. There is no way that that can be justified. I know we will hear from the opposition—and it has been the standard mantra from business itself—that you have to pay extraordinary and obscene packages to get the best talent. That does not bear scrutiny, because the best talent—and there is a lot of discussion about this in corporate management circles these days—has a very clear human dimension to it. It is not just talking about profit lines and management regimes; it is about treating workers within your own aegis with sympathy, as human beings and as people who effectively keep corporations going every bit as much as any CEO may do.

When we go back to looking at how out of kilter this is, the total remuneration of a chief executive of a top-50 company listed on the Australian Securities Exchange was $6.4 million last year, in 2010—$6.4 million. Here we are in a cycle of struggle as far as government is concerned, looking at making things harder for people with disabilities or families who have youngsters at home and are dependent upon government supple­ments, because there is not money in the kitty—and why isn't there money in the kitty? Amongst other reasons, it is because the two-speed economy means the miners and the mining sector are not only not paying their way but making it more difficult for everybody's kitty. Up go interest rates because of these multibillion-dollar profits. Up has gone the dollar because of these multibillion-dollar profits. Much of those profits is being exported overseas. We Greens are in favour of free enterprise, but that means free enterprise which is regulated through the democratic system by this parliament. We do not see in this legislation the required and responsible option of saying to CEOs, 'You can have multimillion-dollar take-home packages, provided they are not more than 30 times the average take-home pay of people in your enterprise.'

Honourable senators interjecting

The ACTING DEPUTY PRESIDENT ( Senator Forshaw ): Excuse me, Senator Brown. There is too much conversation. Senator Brown, you have the call.

Senator BOB BROWN: The Greens—I might say with some embarrassment, because we think even this proposal is out of kilter—will move to amend this bill so that there is a limit of 30 times put on the gap between executive salaries and the average worker. I ask you, Mr Acting Deputy President, and I ask every other senator: when you sit down and think about it, do you believe that executives do 30 times the amount of work of the average worker in any corporation? The answer is: no, they do not. Then do you believe that executives who have had the privilege of getting to the top should not have a qualification which says they understand their workers enough to be able to share the largesse of the corporation so that they do not get more out of the corporation than their work warrants—or, to put it the other way, that the average workers in the corporation are not going home struggling to make ends meet while the executive is working out how to spend a multimillion-dollar take-home package that is more than 30 times that of the average worker in the corporation? Common sense, common decency and an egalitarian approach to the way our society works demand that we seriously look at this extraordinary overrun of the executive pay gravy train, driven up front by executives and boards themselves. From 2001-2010 executive pay rose by 130 per cent, but average weekly earnings rose only by 52 per cent. That is not taking into account real amounts because that is even more startling. On a percentage basis executive salaries are rising at three times that of average workers. Over the last financial year executive pay rose by an average of almost $1 million—$18,000 per week. That is the increase in what Kevin Rudd called 'obscene packages'. Over the same period the average wage of full-time workers rose by just $3,200, or $62 per week. So there you have executives getting $18,000 per week extra and the average workers getting $62. How can we entertain facilitating that sort of increase? The legislation we have before us today says that it will empower shareholders in corpor­ations, if they have a 25 per cent vote twice against executive packages, to have a 50 per cent vote to throw out the board. But it does not really tackle this issue, and the Labor minister and the coalition representative opposite know that—it is not going to occur. The obscenity of these packages cuts right across our national ethos of a fair go.

Company profits as a share of national income are at record levels, but the wages share of national income is at the lowest level since 1984. How can that be? I can assure you that this legislation will not address that problem. In the past I and my colleagues have proposed in this Senate—and Adam Bandt, the member for Mel­bourne, in the House of Repre­sen­tatives—measures which include a cap on total executive remuneration of $5 million to stop the excesses of the past decade. That limit is more than 10 times the Prime Minister's salary. Is anybody in this Senate or the House going to get up and try to explain why any executive of any mining corporation or banking outfit in this country should be paid more than 10 times the Prime Minister's salary? No, nobody in the coalition or Labor ranks will do that, but that is effectively what they will all vote for if they turn down the Greens amendment today—and I am not holding my breath.

Senator Fifield: Feel free.

Senator BOB BROWN: You might wish that I would hold my breath but I am challenging you, when your turn comes again, to respond to this out-of-kilter situation. Look at this: a top marginal tax rate of 50 per cent on incomes of more than $1 million in a year is proposed by the Greens and everybody votes it down.

We also want a binding shareholder vote on company remuneration policy. We believe these measures are sensible and, if implemented, would have already started to rein in the executive salary imbalance that I have talked about. We know what the bill is about. I have put forward the preferred options that the Greens would be pursuing and we stick to our guns on it, because what we are proposing is eminently reasonable; in fact, it is far short of what we should have if we were to have a fairer system in place in this country.

The Greens support other measures in the bill to increase transparency with regard to executive remuneration. That includes increasing the transparency and account­ability with respect to the use of rem­uneration consultants; in particular, that such consultants report to non-executive directors or the remuneration committee. We also support addressing conflicts of interest that exist with directors and executives voting their shares on remuneration packages and agree that directors and executives with voting shares should not be allowed to vote on the remuneration reports.

We also back the components of the bill ensuring that remuneration remains linked to performance by prohibiting hedging of incentive remuneration; requiring share­holder approval for declarations of no vac­ancy at an annual general meeting; prohibit­ing proxy shareholders from cherry picking the proxies they exercise by requiring that any directed proxies that are not voted default to the chair, who is required to vote for the proxies as directed; and reducing the complexity of the remuneration report by confining disclosures in the report to the key management personnel.

These measures also go to implementing some of the principles of executive remun­eration agreed by the G20, nearly two years back, improving the way companies go about determining remuneration for executives and increasing transparency, which is at the heart of this legislation. But when it gets to the key—the actual definition of a limit to executive packages which are right off the show and getting worse—this bill is not going to address the problem. The Greens amendment will address the problem—and very modestly at that—but this bill will not do that. I will be moving the amendments in committee, and I will ask the other senators in the chamber to seriously consider those amendments. I can assure them that they will have the backing of the Australian people if the amendments are supported.