De-Anne Kelly (Dawson, National Party, Parliamentary Secretary Trade) Share this | Hansard source

I am very pleased to have the opportunity to sum up the debate on the Australian Broadcasting Corporation Amendment Bill 2006. I would like to particularly acknowledge the contributions of the members for Kingsford Smith, Oxley, Banks, Canberra, Adelaide, Charlton, Canning, Herbert, Page and Calare. This bill amends the Australian Broadcasting Corporation Act 1983, the ABC Act, to abolish the staff-elected director and staff-elected deputy director positions. The position of a staff-elected director is not common amongst Australian government agency boards. The position at the ABC was introduced in 1975, abolished in 1978, reintroduced in 1983 and given legislative backing in 1985. It is worth noting that the SBS board does not include a staff-elected director.

Despite the comments made by the member for Adelaide, the reality is that the position of a staff-elected director is not consistent with the modern principles of corporate governance and a tension relating to the position on the ABC board has existed for many years. The tension between the expectations of staff and the duties of a director is manifest in the potential conflict that exists between the duties of the staff-elected director, under the Commonwealth Authorities and Companies Act 1997, to act in good faith and in the best interests of the ABC. The appointment of that director is as a representative of ABC staff and elected by them.

This 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 where they are in conflict. This matter was recognised in the June 2003 review of the corporate governance of statutory authorities and officeholders, otherwise known as the Uhrig review. That 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.

On a practical level, this has led to difficulties in respect of board confidentiality, and the ABC staff-elected director felt unable to agree to a revised board protocol that dealt with, amongst other things, the handling of confidential information.

The staff-elected director is placed in a conflicted position if there are expectations that confidential information will be conveyed to constituents in potential breach of obligations to the ABC. This is an untenable position for the board. It is worth noting that a tension surrounding the position on the ABC board has existed for many years. In 2004 this led to the resignation of a director of the highest calibre, Mr Maurice Newman.

During the recent Senate Environment, Communications, Information Technology and the Arts Legislation Committee hearings on the bill, a former staff-elected director confirmed that staff-elected directors are at times placed under pressure by staff to act in ways which are not consistent with their roles as directors. The government is of the view that there should be no question about the constituency ABC directors are accountable to. In order to resolve this problem, the government has decided to abolish the staff-elected director position.

During debate on the bill it was suggested by the member for Kingsford Smith that the Uhrig review was not applicable to the ABC. That assertion is incorrect. The Uhrig review was given a very broad brief, and its findings are relevant across government. The terms of reference of the review were clear, and I will restate them now:

A key task was to develop a broad template of governance principles that, subject to consideration by government, might be extended to all statutory authorities and office holders. ... the review was asked to consider the governance structures of a number of specific statutory authorities and best practice corporate governance structures in both the public and private sectors.

Although the Uhrig review itself focused on particular agencies, its principles are considered generally applicable and all statutory authorities are being considered in relation to them. The proposed change in the bill is consistent with the Uhrig review’s conclusions about representative appointments. The position is also endorsed by Professor Stephen Bartos, Director of the National Institute for Governance. Professor Bartos said in his submission to the Senate committee that the removal of the staff-elected director ‘is consistent with the current corporate governance approach found in most Australian companies and increasingly in public sector bodies’.

There is a clear legal requirement on the staff-elected director that means he or she has the same rights and duties as the other directors, which includes acting in the interests of the ABC as a whole. The government is of the view that there should be no question about the constituency to which ABC directors are accountable. The bill resolves these tensions by abolishing the staff-elected director position. Contrary to suggestions made by some, this change will contribute to the efficient functioning of the ABC board. It is in line with modern corporate governance principles and will provide greater consistency in governance arrangements for Australian government agencies. The bill is intended to give effect to the abolition of the staff-elected director position as close as possible to the expiry of the term of the current staff-elected director. The abolition of the staff-elected director has nothing to do with individuals. This announcement is about ensuring the efficient functioning of the ABC board.

The member for Canberra claimed during this debate that the abolition of the staff-elected director will impact on the independence of the ABC. That assertion must be rejected. The removal of the staff-elected director in no way impacts on the independence of the ABC. The independence of the ABC is enshrined in legislation. Section 78(6) of the ABC Act states:

... the Corporation is not subject to direction by or on behalf of the Government of the Commonwealth.

Section 8(1)(b) of the ABC Act makes it a duty of the board to maintain the integrity and independence of the corporation. Accordingly, it is the duty of all board members to maintain the ABC’s independence and integrity, irrespective of the existence of a staff-elected director position.

As was clearly articulated by the member for Herbert, on the subject of independence it is worth noting that the Howard government has made a major commitment to the funding of public broadcasting in Australia and has substantially increased ABC funding since 1997. It is the first government to give the ABC additional money for programming since the mid-1980s. In the 2006-07 budget, the government announced that the ABC would receive significant new funding in the 2006-09 triennium. The government confirmed that it would maintain the ABC’s triennial base funding in real terms, in line with its election commitment. In addition, the government announced that the ABC will receive $88.2 million for new initiatives over the next three years. This increased funding means that in 2006-07 the ABC will receive total funding from the Australian government of $822.7 million. For the three years to 2008-09, government funding to the ABC will total nearly $2.5 billion.

This budget outcome has been welcomed by the Chairman of the ABC and others as the best for the ABC in more than 20 years—a point which I would say was well made by the member for Canning. This increased funding is a clear demonstration of the Howard government’s commitment to ensuring that the ABC remains independent and that it is able to continue to deliver the quality programming and high standard of service that Australians have come to expect.

Another of the arguments raised by the other side in support of retaining the staff-elected director position is that previous staff-elected directors have been influential in preventing commercial decisions that would have been damaging to the ABC. While it may well be that these individuals played a role in these decisions, I note that the ultimate decisions were decisions of the whole board and that, without detailed knowledge of the workings of the ABC board, it is very difficult for anyone to accurately apportion credit for these decisions.

The issue of the consideration of staff issues by the ABC board has already been raised by the member for Adelaide and the member for Canberra. The ABC chairman has indicated publicly that the ABC board and management will continue to take staff interests into account as they do already. Further, the managing director is a full member of the ABC board and a conduit between staff, management and the board. I note that a new Managing Director of the ABC, Mr Mark Scott, has recently been appointed. Mr Scott has considerable media and management experience. Further, the heads of the ABC divisions report regularly to the board. Therefore—responding to concerns raised by the member for Oxley and the member for Charlton—there are obviously ways other than having a staff-elected director by which the board can consult with ABC staff about issues concerning them.

Much has been made during the debate about the previous experience of directors on the ABC board. I would like to draw the attention of members to the criteria set out in section 12(5) of the ABC Act regarding the process by which the government appoints ABC directors. One of these criteria is ‘experience in connection with the provision of broadcasting services or in communications or management’. Several of the current board members have experience in connection with broadcasting, despite the assertions by the member for Canberra. For example, the deputy chair, John Gallagher, was a director of a regional television broadcaster, Mackay Television, for 16 years from 1971 until 1987, and Mr Steven Skala was a director of the Channel 10 group from 1993 until 1998. There are a number of ways that the board can have regard and access to practical broadcasting experience in making decisions, irrespective of the board membership. So to say that the ABC board is deficient in broadcasting experience is a tenuous argument at best.

It has been suggested also that the ABC is a unique organisation and should be immune to the principles of good corporate governance mentioned in the Uhrig report. I am advised, however, that it is not at all common for Australian government agencies to have staff-elected representatives on their governing bodies. The only exceptions to this rule that we are aware of are educational and statistical institutions such as the Australian National University, the Australian Film, Television and Radio School and the Australian Institute of Health and Welfare. I note that most Australian higher education institutions include both staff and student representatives on their governing bodies. These organisations are quite different from the ABC, which is a national broadcaster intended to serve all Australians. Further, as I have already noted, the other national broadcaster, the SBS, does not have a staff-elected director.

During the debate there have also been suggestions that the board appointments process should be changed to something resembling the method used for appointing governors of the BBC, involving what are called the Nolan rules. The current appointment process, which is set out in section 12 of the Australian Broadcasting Corporation Act, provides that appointments to the ABC board are made by the Governor-General. This method of appointment reflects standard practice for Commonwealth statutory authorities. The government seeks to meet the criteria set out in the ABC Act and to ensure that the members of the ABC board have a mix of skills appropriate to the running of a modern corporation with an annual budget in excess of $800 million.

The Nolan rules are a method of board appointment based on recommendations of the Committee on Standards in Public Life—the Nolan committee. Under the rules, appointments are made on the basis of recommendations provided by an independent advisory panel in accordance with the code of practice. The two most recent appointments to the BBC chairmanship, Mr Gavin Davies and Mr Michael Grade, have been recommended to the government by a panel chosen by the Department of Culture, Media and Sport consistent with the code of practice laid down by the Office of the Commissioner for Public Appointments.

It is worth noting, with respect to the argument to adopt the Nolan rules to avoid the appointment of board members who are too closely associated with a political party, that a Nolan’s rules type process will not necessarily deal with this issue. I note that that argument has been put forward by the member for Kingsford Smith and others. In September 2001 Mr Gavin Davies was appointed Chairman of the BBC under the Nolan rules. Mr Davies was a Labour Party member and a long-time ministerial advisor to Labour governments in the United Kingdom. The appointment was criticised by the UK opposition as calling into question the BBC’s political impartiality. The government is committed to the existing appointments process and considers that it works well.

In conclusion, I would like to remind the House of the government’s attitude towards the ABC. The Howard government supports an independent, successful ABC that delivers high-quality programming to Australian audiences. The recent budget outcome that will deliver the ABC funding in the order of $2.5 billion over the next three years is a clear demonstration of that support. The removal of a staff-elected director in no way compromises the independence of the ABC. The government has taken a decision to abolish the position of the ABC staff-elected director for sound reasons. I particularly commend the contributions of the member for Canning, the member for Herbert and the member for Page in this regard. The government is of the view that there should be no question about the constituency to which ABC directors are accountable and therefore supports the abolition of the position of ABC staff-elected director. I commend the bill to the House.

Question put:

That this bill be now read a second time.

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