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Thursday, 26 November 2009
Page: 13251


Mr BILLSON (2:35 PM) —The coalition strongly supports our national broadcasters. We recognise the important role that both the ABC and SBS play in broadcasting both television and radio services across Australia and, more recently, in terms of their online content and presence. While in government the coalition ensured that the ABC and SBS were well resourced and able to meet the challenges of the future, including the transition to the digital environment.

We want both the SBS and ABC to be strong and innovative broadcasters and to serve well the unique roles they play in Australia and in Australian life. The coalition is committed into the future to ensuring a well-resourced ABC and SBS in recognition of their unique role as national broadcasters. However, it is because these organisations receive substantial taxpayer funding that we need to ensure that they adopt the highest level of corporate governance and have in place appropriate governance structures. These broadcasters need strong and professional boards who understand the role of the broadcasters and their responsibilities to Australians, who fund them.

This legislation consists of two parts. The first part of the National Broadcasting Legislation Amendment Bill 2009 seeks to amend the Australian Broadcasting Corporation Act 1983 and the Special Broadcasting Service Corporation Act 1991 to implement a new, merit based board appointment process to appoint directors to the ABC and SBS boards. The merit based selection process establishes a nomination panel that is to conduct a selection process for each appointment of a director. The nomination panel will comprise a chair and at least two, and not more than three, other members appointed by the Secretary to the Department of the Prime Minister and Cabinet for part-time office for a period not exceeding three years.

The nomination panel must advertise any vacancy nationally, assess all applications against selection criteria set by the Minister for Broadband, Communications and the Digital Economy and provide a report to the minister, or the Prime Minister and the minister in the case of the ABC chairperson, containing at least three nominations. The Prime Minister must consult the Leader of the Opposition before recommending the person to be appointed as ABC chairperson. If the person to be appointed as ABC chairperson is not nominated by the nomination panel, the Prime Minister must table the reasons for that appointment within 15 sitting days. The bill proposes that the following candidates are not eligible for appointment to the boards of national broadcasters: a member or former member of the Parliament of the Commonwealth; a member or former member of the parliament of a state or the Legislative Assembly of the Australian Capital Territory or the Legislative Assembly of the Northern Territory; or a person who is or was a senior political staffer. The bill gives the minister the ability to determine by legislative instrument the definition of ‘senior political staff member’, but the explanatory memorandum says that it is envisaged that it would specify positions such as chief of staff, special adviser, principal adviser, senior adviser, media adviser and adviser.

In October 2008, Labor announced that they would commence a new merit based selection process and seek to reinstate the staff elected director. At this time they called for public nominations for the positions of directors of the two boards and created a nomination panel to assess the applications. In April 2009, the government announced the appointment of two directors to the SBS board and two directors to the ABC board, using the new merit based selection process. Senate estimates confirmed that the government spent approximately $200,000 on the selection process utilised to appoint the four new directors to the boards of the national broadcasters in April 2009. This included payment for the members of the nomination panel, engagement of a recruitment firm and the advertisement of the vacancies. As mentioned in the bill, there is no guarantee that the nomination process will produce a successful nomination and it is still within the government’s power to make an appointment that is not a recommendation of the nomination panel, provided the selection process has been undertaken. Further, the legislation is not actually required to facilitate the government’s nomination and appointment process, as the government has already undertaken such a process.

Senator Conroy told Lateline Business on 5 December 2007 that the merit selection process was based around the Nolan principles imported from the UK. In 2006, when the Senate held an inquiry into the composition of the ABC board and the coalition’s changes to remove the staff elected director of the ABC, departmental officers told the inquiry:

If the argument to implement something like the Nolan rules relates to avoiding the appointment of board members who are too closely associated with a political party, a Nolan rules type process would not necessarily deal with that issue.

The bill proposes that former state and federal politicians and senior political staff are not eligible for appointment to the boards of the SBS and ABC. Former politicians have made a valuable contribution to the board of the ABC and other government bodies. For instance, in 1994 Labor appointed former South Australian Labor Premier John Bannon to the ABC board. Former Liberal senator Neville Bonner was appointed to the ABC board in 1983.

Labor’s position on the value of former politicians on government boards is entirely inconsistent, as evidenced by Mr Rudd’s appointment of former Labor minister John Kerin to the CSIRO board, former Victorian Premier Steve Bracks as an adviser for the car industry and former coalition Treasurer Peter Costello to the Future Fund Board of Guardians. It is hypocritical for the government to claim on the one hand that former politicians provide valuable skills and experience to assist some boards but on the other hand not the boards of the national broadcasters. Further, there is no cooling off period for former staff or politicians but rather a blanket ban on them ever being eligible for appointment to the board of a national broadcaster. This is at odds with the principle of the 18-month cooling off period incorporated in the Rudd Labor government’s Standards of Ministerial Ethics. These proposals need to be examined for what they really are. They do not prevent current or former party officials or those with other political affiliations from being appointed to the boards. For instance, in the past former Labor candidate David Hill has served as both Chairman and Managing Director of the ABC and Michael Kroger also served as a director on the ABC board. These proposals do not restrict such appointments, which further serves to highlight how superficial the proposals really are.

We should also at this point question the bona fides of this minister, Senator Conroy, when it comes to political interference. Senator Conroy has done very little during his time as minister besides waste money on his flawed NBN. We have seen millions wasted on the failed NBN mark 1 tender and we are now seeing some exorbitant salaries being paid as part of the NBN Co, including to former staffer Jody Fassina, who was appointed to the board of Tasmania NBN Co and the $450,000 salary—almost $100,000 more than is paid to the Prime Minister—being paid to Senator Conroy’s mate and disgraced former Queensland MP Mike Kaiser to do government relations for a company with no customers, no services, no income and no business plan. Senator Conroy seems happy to have an empty Labor suit for an empty shell company created on an empty Labor promise but not to even consider a competent and capable former parliamentarian or senior public policy specialist for the SBS or ABC boards. Despite the nomination process machinations, the candidate selection and evaluation process and the superficial personnel prohibitions that we have talked about, the Rudd Labor government can still appoint whoever they want to the ABC and SBS—and you can be certain that they will not be a Labor critic.

The second part of this bill relates to the position of staff elected director on the ABC board. The first staff elected position on the ABC board was introduced by the Whitlam government, without legislation, in 1975. The position was then abolished by the Fraser government before the Hawke government enshrined a staff appointed director position in legislation in 1986. In 2006, the coalition amended the Australian Broadcasting Corporation Act 1983 to remove the position of staff elected director from the legislated composition of the ABC board to improve corporate governance of the organisation. The decision to abolish the staff elected director was announced following the coalition government’s Review of Corporate Governance of Statutory Authorities and Office Holders conducted by Mr John Uhrig AC, and the removal of the staff elected director was consistent with Uhrig’s recommendations about representative appointments. The Uhrig review concluded:

The review does not support representational appointments to governing boards as representational appointments can fail to produce independent and objective views. There is the potential for these appointments to be primarily concerned with the interests of those they represent, rather than the success of the entity they are responsible for governing. While it is possible to manage conflicts of interest, the preferred position is to not create circumstances where they arise.

A staff elected director will be forever mindful of his or her constituency—in this case, the staff of the ABC. I am certain that much of the time there is a coincidence of interest, a shared purpose and alignment of objectives between the staff and the corporation. But that is not always going to be the case. Innovation and reform, by their very nature, distresses and disturbs the status quo and can disrupt settled positions and ways of doing things.

Innovation and reform is about change. Change can be resisted by those that it is impacting upon by the transformation of the staff elected director into a position of conflict. Does the staff elected director feel obliged to defend the entrenched, or feel a duty to protect the potentially retrenched? A director fully discharging their responsibilities, who values the important role and contribution of staff and who fully embraces the corporate objectives and imperatives, will engage in the thoughtful change management strategies of the organisation and ensure there is effective and sensitive transitional support.

Would the remarkable gains made by the ABC online, for instance, have occurred? Would the ABC’s presence and service reach and the expansion of its activities into rural and remote areas have occurred if a staff elected director was of the view that these welcome and important innovations were at the expense of resources going to roles and positions in the traditional or established and existing areas of activity?

It may well be possible to abate and manage corporation and constituency conflicts of interest, but is it not preferable to not create the potential for that conflict in the first place? The position of staff elected director was seen as an anomaly amongst government agency boards. The other broadcaster, SBS, does not have a staff elected director.

The coalition was also concerned about the potential conflict of interest of a staff-elected director who is legally required to act in the best interests of the ABC but is appointed as a representative of staff and is elected by them. The explanatory memorandum to the 2006 bill stated:

The Bill addresses an ongoing tension relating to the position of staff-elected Director. A potential conflict exists between the duties of the staff-elected Director under paragraph 23(1)(A) of the Commonwealth Authorities and Companies Act 1997 to act in good faith in the best interests of the ABC, and the appointment of that Director via election by ABC staff. The election method creates a risk that a staff-elected Director will be expected by the constituents who elect him or her to place the interests of staff ahead of the interests of the ABC as a whole where they are in conflict.

The Senate held an inquiry into the legislation to remove the staff elected director in 1996. In relation to conflicts of interest, in giving evidence to the Senate committee inquiry officers from the department confirmed the view of Uhrig to the committee that ‘while it is possible to manage conflicts of interest, the preferred position is not to create circumstances where they arise’. Professor Stephen Bartos, Director of the National Institute for Governance, made a submission to the inquiry that stated:

… the Uhrig Report is an accurate reflection of commonly accepted practice in Australian corporate governance. In this country we have applied a model of governance that does not favour representative appointments.

And that:

More broadly, staff-elected directors on a Board do represent an anomaly amongst Australian public and private sector boards in general governance terms …

At the time of the 2006 announcement, the then Chairman of the ABC, Mr Donald McDonald AO, stated that he had worked with three staff elected directors and said:

Inevitably there has been a tension between the expectations placed by others on their role and their established duties as directors of a corporation.

In further evidence to the Senate committee inquiry, the department told the committee:

The issue is not really about what may or may not have happened in relation to individual directors in the past. The issue is one of what is best practice corporate governance for the ABC, and Uhrig has recommended that there should not be positions like this on government boards.

The 2006 Senate committee concluded:

This Bill aligns the operations of the ABC Board with modern principles of corporate governance and accountability, as explained in the Uhrig Review. By abolishing the position of staff-elected Director, the Bill resolves the potential conflict of interest in being under a legal duty to act in good faith and in the best interests of the ABC, whilst at the same time being expected by those that have elected them (i.e. ABC staff) to primarily represent and act in their best interests.

This bill represents an important step forward in reforming the ABC board and ensuring the longevity of the ABC as a public broadcasting service to the people of Australia today and into the future. The same concerns that led to the coalition decision to remove the staff elected director position from the ABC board remain, and these have not been addressed by the government. Not one single piece of challenging evidence or argument has been brought forward to tackle assessment after assessment about why this proposition is inconsistent with modern concepts of corporate governance.

The minister’s second reading speech merely states that the government does not believe there is any inherent conflict of interest. The government offers no evidence to support that assertion. The coalition does not agree. The coalition’s position in relation to this legislation is twofold. We remain resolutely opposed to the reinstatement of the position of staff elected director. We also believe that the bill should be amended to provide for an 18-month cooling-off period for former MPs and political staff serving on the board.

The coalition think Labor’s perpetual ban on former political staff and members of parliament serving on the boards of the national broadcasters is a cheap stunt. It is hypocritical and inconsistent. Former politicians and their staff may have skills and experience applicable to the board. Indeed, former politicians, including Labor’s John Bannon, have made valuable contributions to the boards in the past. Why are the government so against former politicians on the boards of the ABC and SBS when they have appointed former politicians to other boards and positions? It is inconsistent. If they claim appointing former politicians equates to political interference, why are they so comfortable putting former MPs on other government boards? Labor’s arguments do not stack up. They should be seen for what they are: more, and merely more, Labor spin—particularly in this portfolio.

How can Senator Conroy, the Minister for Broadband, Communications and the Digital Economy, claim with any semblance of credibility that he does not play politics with appointments? He has appointed his mate Jody Fassina to the board of Tasmania NBN Co., and his mate Mike Kaiser is receiving a $450,000 salary as government relations adviser to NBN Co. The approach of the government should be seen for what it is. They have given us absolutely no reason to believe that they are genuine about removing apparent or perceived political interference on the boards of our national broadcasters.

This merit selection process is full of holes, and I have no doubt this government will fill every one of them with their like-minded mates. They cannot tell us why it is okay to appoint former politicians to some boards and not others and, even with this system, they cannot guarantee that the ABC and SBS boards will not be stacked with Labor sympathisers. The coalition do not oppose the merit selection process but we think there should be some consistency so that former MPs and their staff can be considered for the boards if they have the necessary skills.

For consistency with the Rudd government’s own ministerial code of ethics, we will seek to amend the bill to implement an 18-month cooling-off period for former MPs and political staff. In relation to schedule 2 of the bill, Labor has not been able to justify the need to reinstate the staff-elected director. We remain opposed to the reinstatement of a staff-elected director on the ABC board for the same reasons we acted to remove that position when in government. If our amendments to omit this schedule from the bill are not successful, we cannot support the bill. I will speak further about the specific amendments in the consideration-in-detail stage. I urge members of this parliament to see these changes for what they are: they are a stunt and they add nothing to the long-term wellbeing, viability and vitality of our national broadcasters.