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Monday, 3 November 2003
Page: 21828


Mr MURPHY (9:10 PM) —I bring to the attention of the House an item of business that appears in the Telstra annual general meeting 2003 notice of meeting—scheduled to take place this Friday, 14 November. This item should be of serious concern to all members of the House. Specifically I refer to item 3 of the said notice at page 7, which reads in part as follows:

In accordance with Article 16 of the constitution and ASC Listing Rule 10.17 at present, the maximum aggregate amount payable annually as fees to non-executive directors of the Company ... is fixed at A$1,150,000 (per annum).

Item 3 goes on to say:

The maximum aggregate fees payable to directors were last increased at the 1999 AGM from A$750,000 to A$1,150,000 per annum.

The proposal before the meeting is to increase the maximum aggregate amount of directors' fees by A$170,000 to A$1,320,000 per annum.

The reasons given for the increase in directors' fees as stated in this item are:

The increased limit:

Has regard to the increased size, nature and complexity of the Company's operations and the increased responsib-ilities of the Board; and

Compares favourably with the fees of directors of companies of comparable size.

What a hide the directors of Telstra possess! What audacity of the board to move this item whilst Telstra flounders in a sea of miserable corporate performance! The so-called captains of industry on the board of directors of Telstra should be flogged then sacked for their pathetic mismanagement and abysmal market performance over the past 12 months, not rewarded with a $170,000 per annum pay increase for incompetence. This pay increase is a huge remuneration hike of 14.78 per cent in one year. The 1999 increase from $750,000 to $1,150,000—an increase of $400,000 per annum—was an increase of over 53 per cent. I cite the News Interactive media statement titled `Telstra reappoints Ziggy', dated 14 October 2003, which states:

The announcement—

to reappoint Ziggy Switkowski as Chief Executive—

comes on the eve of Telstra's full-year result, which analysts forecast to slump 17 per cent to around $3.03 billion, following the $965 million writedown of its Reach joint venture in Asia made in February.

... ... ...

Analysts said there were concerns over the telco's ability to hold onto its current 45 per cent share of the Australian mobiles market, as number two player Optus continues to increase its user numbers.

The media release notes:

Dr Switkowski's basic remuneration package was $1.46 million, but he could earn an extra 75 per cent in performance bonuses.

What we have here is the clearest example yet of why Telstra cannot afford to be sold into majority private interests. This item represents the most flagrant breaches of any performance standard imaginable. The foreshadowed Telstra dividend of 12c in my view exists only in preparation for the now failed sale of Telstra, as the Senate so wisely rejected. As I said of Sydney airport, I now say of Telstra. Yet again we have the government fattening the lamb for the kill. Again we see the unsustainable and unjustified issuance of grossly inflated dividend distributions coupled with totally unjustifiable board of director remuneration packages totally out of proportion to what really matters—the performance of the corporation. I say again: the directors of Telstra should be flogged then sacked. They are losers. Under their stewardship, Telstra is a loser. I join with the shadow minister for communications, Lindsay Tanner, and call on the Howard government to exercise its 51 per cent and controlling interest to vote against item 3 next Friday at the forthcoming annual general meeting of Telstra.