Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 16 March 2005
Page: 75

Senator WONG (2:28 PM) —My question is to Senator Coonan, representing the Assistant Treasurer. Is the minister aware that the Prime Minister recently warned company executives to show restraint and curb their pay? Is the minister also aware that the Howard government recently rejected a recommendation supported by members of their own backbench that company executives should not be able to set their own pay? How can the minister justify the Howard government’s view that executives should be able to set their own pay as outlined in the government’s response to the corporations committee report on the corporate law reform program known as CLERP 9? Doesn’t this show that the Prime Minister does not mean what he says and actually supports executives setting their own remuneration, even if there are no reasonable grounds to do so?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —Thank you to Senator Wong for the question. I think by now we have had in this chamber something like an exhaustive debate that has ranged over months, relating to issues to do with corporate governance and the setting of executive remuneration, the amendments to CLERP 9 and the amendments to the various accounting rules that arose out of Sarbanes-Oxley. There have been Senate reports in relation to it, and I do not seriously think that I can add very much more to the fact that the government has moved the amendments that we thought were appropriate through the CLERP 9 process. That has addressed the governance arrangements that have been recommended in relation to the CLERP 9 response. I think it has well and truly taken up the recommendations that Senator Wong has referred to.

Clearly, the matter of executive pay is a matter for relevant boards to determine. As we have said, whilst it might have some appeal to those opposite to try to prescribe and sit in on boards and decide the rate of executive pay, that is not the way the market works. It is appropriate that there be some safeguards. We have all, I think, on this side of the chamber—certainly the Prime Minister, certainly the Treasurer—made comments where there have been some concerns at what appear to be a very large executive payouts and executive remuneration, particularly when it may not necessarily have been related to the good performance of a corporation. In all of the circumstances, I think that the governance arrangements that have been put in place adequately address the issues that have been agitated very extensively in public, in here and in various committees over the past months, and it is certainly not something that the government would be intending to revisit. We think that the rules are appropriate for the setting of executive remuneration, the disclosure of executive remuneration and the payment of people when they leave the employ of a corporation.

Senator WONG —Mr President, I ask a supplementary question. Perhaps the minister could advise the Senate which other employees in Australia can set their own pay? Is the minister also aware that the government rejected a recommendation to require companies to clearly state executive performance requirements in their remuneration reports? Given that executives can set their own pay and not report what that pay is based on, isn’t it the case that the Howard government is simply supporting corporate executive greed?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —Thank you for the supplementary, Senator Wong, but it is based on a completely false premise. The Howard government does not support people setting their own pay, as it is put; what the government supports is that executive pay be determined by boards and that pay reflects the governance conditions and arrangements that were agreed to, debated and in fact passed through the House and are now the law in this country. That is what the Howard government supports, and it is an entirely appropriate response to the issues that were identified and taken up in the CLERP 9 report and the very exhaustive process of amending the Corporations Law.