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Wednesday, 23 October 2002
Page: 5724

Senator CONROY (2:51 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Is the minister aware of the call by the former CEO of BHP Billiton, Mr Paul Anderson, for a freeze on executive remuneration, following a period of obscene increases in executive remuneration? Does the minister support Mr Anderson's call for a freeze on executive remuneration packages designed to `let the market settle down'?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Conroy. You can always tell when the opposition are starting to run out of questions: they always come back to executive options. The situation with options and executive remuneration is that it is a matter for the individual corporations and it is a commercial matter as to what remuneration somebody should receive. It is a very different matter if a company is insolvent. The government, as I explained very carefully yesterday, has introduced an amendment to the Corporations Law. In the circumstances where excessive remuneration has been paid to executives, or indeed where any unreasonable bonuses have been paid to executives, and a company subsequently becomes insolvent, there will be an action available to the liquidator to recover any unreasonable amount. That, of course, would be made available to the liquidator for distribution to creditors and for other purposes. It is a matter for the shareholders as to what is an adequate or inadequate amount to be paid to their executives. Most executives are paid, as you would expect, on performance. It is entirely then a matter for shareholders, if the company is not insolvent, as to whether or not that is adequate.

This is a very interesting matter. For 13 years Labor appeared to sleep through this as a problem. It is interesting that Mr David Murray's remuneration was set for the Commonwealth Bank about 10 years ago. In the last few weeks he managed to make himself available for about $7 million. For 13 years the Labor Party did nothing about this; they did nothing about employee entitlements. It is an absolute disgrace. Now they come into this chamber and, when they are running out of steam in question time, they bring up this old chestnut again. Even with the wreckage of economic disaster around them, the Labor Party did nothing for employees and nothing in respect of executive payment for 13 years. It has been left to this government to pick up the pieces of Labor's mess, which is the usual style, and to bring in not only a scheme for employees but also an amendment to the Corporations Law to make sure that anything that is unreasonably paid to executives can be made subsequently available to a liquidator.

Senator CONROY —Mr President, I ask a supplementary question. I refer to the minister's comment yesterday and again today that it was an absolute disgrace for the Labor Party to even raise a question in relation to executive remuneration. Is the minister aware of a recent survey by Ernst and Young and Orient Capital that found only 29 per cent of companies' managements thought it was important to consult shareholders on executive pay, while 81 per cent of shareholders thought it was important? Isn't it a disgrace that, while this government avoids any debate on the issue of executive remuneration, companies can ignore shareholders who want to be consulted on how much of their money is being siphoned into the pockets of greedy executives?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Conroy, for the supplementary question. Unfortunately it ignores the fact that shareholders have got every right at an annual general meeting to raise the issue of executive remuneration. Indeed, they have every right not only to raise it at annual general meetings but also to raise it independently with the chairman and the board of any corporation. To suggest that the issue is not adequately dealt with by a possible clawback if a company becomes insolvent really just begs the question.