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Wednesday, 1 December 2004
Page: 69

Senator CONROY (2:49 PM) —My question is to Senator Coonan, the Minister for Communications, Information Technology and the Arts. Can the minister confirm for the Senate that Telstra boss Dr Ziggy Switkowski agreed to step down this morning as CEO and is entitled to receive a payout of over $2 million? Can the minister confirm that, under Dr Switkowski, thousands of Telstra employees have lost their jobs, billions of dollars have been lost overseas and Telstra's share price has gone down significantly—lowering the value of the shareholding of millions of Australians—from more than $8 when he was appointed in 1999 to less than $5 today? As the government is the majority shareholder in Telstra, is the minister satisfied that Dr Switkowski's $2 million golden handshake is justified given Telstra's performance in recent years?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —I thank Senator Conroy for his question. I am glad that he has found time to pay a bit of attention to his shadow portfolio because it is a portfolio where issues change from day to day. The government was advised this morning of Dr Switkowski's decision to step down from the position of CEO of Telstra on or before 1 July next year. It was, of course, a decision reached by Dr Switkowski in consultation with the Telstra board. As to Dr Switkowski's remuneration—and I think the terms of Dr Switkowski's remuneration have been up on Telstra's web site for about a year—the payout, as I understand it, is $2.09 million as well as accrued leave and incentive payments. He will also receive fixed remuneration in lieu of notice should he go before 1 July.

As Senator Conroy would know, the government certainly does not seek to intervene in the remuneration decisions of companies. Our approach is to ensure that there is full disclosure by directors and that boards are accountable to their shareholders for remuneration decisions. As Senator Conroy would know from the very lengthy discussion in this chamber about it, the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004, fondly known to all in here as CLERP 9, significantly enhances the director and executive remuneration disclosures that are made in annual reports. The important thing is that there be transparency in disclosure, and that is certainly what has happened here. Among the information that needs to be disclosed, partly due to my colleague Senator Campbell's close attention to this issue in the whole of the CLERP 9 process, is post-employment benefits, including retirement benefits and contributions and other arrangements to benefit employees following cessation of employment.

As everyone would be aware, Telstra, as a result of its corporatisation by a previous Labor government, is subject to these and all other corporate law requirements. So there is nothing remarkable about Dr Switkowski's remuneration, which is subject to contract and properly disclosed to shareholders. In fact, the board, as I understand it, would be adhering to this contractual arrangement that has been notified and up on Telstra's web site for over a year. I am not at all sure what Senator Conroy is seeking to derive from this because, on my understanding, Dr Switkowski's remuneration was certainly not at the top of executive bands and payouts. The particular issue that needs to be emphasised is that, while these kinds of payments are important, it is really important that there is appropriate disclosure. That is exactly what has happened in this instance.

Senator CONROY —Mr President, I ask a supplementary question. The key issue here is performance and the golden handshake and whether Dr Switkowski is entitled to it. Can the minister confirm that one of the preconditions for the sale of Telstra is for the share price to reach at least $5.25? In light of the rise in Telstra's share price when rumours of Dr Switkowski's demise as CEO circulated recently and of Telstra's plummeting share price during Dr Switkowski's stint as CEO, hasn't the government sacrificed Switkowski to sell Telstra?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —Dr Switkowski's payout has been well and truly publicised. It has been on Telstra's web site for about a year. In fact, in my earlier answer I specified what that was. The clear point about this is that it has been disclosed and it is an appropriate contractual obligation for Telstra to adhere to in coming to an arrangement with Dr Switkowski, whether he goes before or on 1 July.