Ged Kearney (Batman, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) a recent report into CEO remuneration found that the average total pay of ASX 100 CEOs rose by 9 per cent last year—4 times the pace of average wage growth;

(b) the median ASX 100 CEO earned more than $4 million, and the average pay for ASX 100 CEOs was 75 times the average pay of full time workers, meaning a CEO takes home in a single year what it would take the average worker nearly two careers to accrue;

(c) excessive remuneration was not always the norm, given in the late 1970s, the BHP CEO was earning only around 6 or 7 times what an average Australian worker took home; and

(d) there is widespread public concern about inequality, and in particular that CEO salaries are growing at an unfair rate and leaving workers behind;

(2) recognises that:

(a) large firms in the United States and the United Kingdom are required to report ratios between CEO pay and workers in their firms;

(b) excessive CEO pay makes firms less profitable than they should be, with experts noting that an excessive gap can hurt employee morale and reduce productivity;

(c) remuneration ratio transparency is not an affront, but rather a complement, to a market economy; and

(d) extending current market reporting requirements for public companies helps inform investors as they calculate risks and decide where to invest their money; and

(3) calls on the Government to support Labor's plan to implement reporting rules requiring large listed firms to publicly release the ratio of total CEO remuneration and median worker pay.

This motion calls on the government to support Labor's plan to implement reporting rules requiring large listed firms to publicly release the ratio of total CEO remuneration and median worker pay. CEOs' salaries are growing at an unfair rate and are leaving workers behind. Our plan will promote fairness and tackle inequality in the workplace. We on this side of the House have long been concerned about rising inequality and the consequences for the common good of our society. As a nurse, I saw the impacts on the health outcomes of people with little means. The social determinants of health are well documented and it has been well proven that those with little means suffer much worse health outcomes than those with a lot of money. Inequality breeds ill health. It is a no-brainer that poor health outcomes are not desirable for a strong economy or a good society.

As a nurses union official I worked hard with nurses right across the country to ensure nurses, predominantly women, earned a decent pay rate and had fair conditions that afforded them a decent life. This was not only good for the working women and men in the nursing workforce but also for the whole community, who use our hospitals and our health system. A workforce that is valued and cared for is a productive workforce that strives to offer good quality services or products. So it is in everyone's interests to have a healthy and happy workforce. As president of the ACTU—my goodness!—I saw inequality in our society in its worst forms: from working with the Australian Unemployed Workers' Union, representing people languishing on the pitifully poor Newstart, to the NUW, which represents exploited workers in agriculture, supplying goods to the massive food chains like Woolworths and Coles, and the FSU, fighting to stop the big banks' executives forcing punitive sales targets on the lowest-paid workers in the industry, resulting in outcomes that are not good for customers or the workers themselves. The banking royal commission is shining a light on some of the darkest outcomes of that industry. Now, the advent of the gig economy has deepened concern about the impact low and unfair wages are having on equality and the lives of those who are unfairly or illegally paid low wages.

Despite what those on the other side of the House will try to tell us, inequality is alive and well and growing in Australia. One of the starkest examples of this is the discrepancy between the massive salaries of CEOs and executives and those of the workers they employ. My colleague the member for Fenner has pointed out that the average pay for ASX 100 CEOs is 75 times the average pay of full-time workers. In a single year a CEO takes home what it would take the average worker nearly two lifetimes to accrue. Put another way, the average ASX 100 CEO earns an average worker's salary every five days. This has been a worsening trend over the last 30 years and it's no coincidence that this has paralleled the advent and rise of neoliberal trickle-down economics. The word 'trickle'—and maybe that's the clue—is just that: a painfully slow, almost imperceptible, flow of earnings from the wealthiest in our economy to the mass of the population, who are the workers.

I'm so proud to have either been a member of unions or to have worked for unions all my working life. Unions are a force for good that do their best to turn the trickle into a decent flow. It's well documented that, when it comes to pay, unionised workforces fare much better than non-unionised workforces. Injuries are fewer in workplaces where unions have a strong presence and, where workers are valued and involved in decision-making, productivity is higher. But laws in this country impede unions from doing their job properly, and they do not make it easy to join. Unfortunately, we hear of unions having to consider breaking those laws, but it's always in the context of trying to get decent pay rises for their members, or to protect the safety of workers in the workplace, or to bring some justice for their members in an unfair economy. When banks break the law or behave unethically, it is simply for more profit and more money to the lucky few with little consequence. It is rarely to make anyone's life better.

This time, I rise to move a motion that I hope will change some of that, a motion that will force companies to be transparent about their CEOs' pay and how it compares to that of their workers. We have all seen the outrage of the behaviour of the banks, as exposed by the royal commission, and poor reputation is a risk. Greed is now a reputational risk. At last, sheer greed will be exposed by this transparency initiative, driving behavioural change that just might help to stem the flow of rising inequality by increasing the flow of wealth to the workers. I commend this motion to you.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Andrew Giles (Scullin, Australian Labor Party, Shadow Assistant Minister for Schools) Share this | Link to this | Hansard source

I second the motion. I'm very pleased to join my friend the member for Batman in supporting this very important motion on CEO remuneration, which touches on wider issues of inequality: inequalities of income, inequalities of wealth and inequalities of power. This motion reminds us that inequality is fundamentally a political choice. It shows that this side of politics is committed to remaking the choices, to remaking the neo-Liberal framework of decision-making to restore equality in Australian workplaces and in Australian society. This motion tells us that there is indeed a moral imperative to change how remuneration is functioning, how stagnant wage growth for ordinary workers is being exacerbated by extraordinary incomes and earnings connected to capital which are being taken in by CEOs and other executives.

We also recognise that this moral imperative carries very, very significant practical consequences for the sort of society we want to live in. On this side of the house we reject the notion that greed should drive our workplaces, but we also appreciate, as do the OECD and the IMF, that this excessive level of inequality is actually bad for economic growth. We see inclusive growth as key to a functioning Australian economy as well as a decent Australian society. I'm very pleased to have the opportunity to litigate these issues and to talk about Labor's approach because this is an issue of deep concern to me. In fact, two years ago I moved a very similar motion. Since then, in the past two years we have seen this issue of the gap between CEO remuneration and that of ordinary workers get worse, not better, and we've seen inaction on the part of the government. I am indebted that elsewhere there has been action. I'll talk about Labor's response but I note, in particular, that earlier this year The Guardian, through the excellent journalists Greg Jericho and Gareth Hutchens, produced an excellent series on the pay paradox, looking at the challenge of declining wages in Australia. We have 26, nearly 27 years of consecutive economic growth where the labour share of the economy continues to fall. There is also a disconnection between labour productivity growth in the economy and growth in wage rates.

This is a complicated challenge. The member for Batman touched on one of the critical responses, which is, of course, to restore the imbalance of power between workers and unions on the one hand and employers on the other. She said it far more eloquently and based on far more experience than I can bring to bear to this. There are some other things that we can and should be doing as well beyond this, and this motion highlights that. We can look to the biggest gap between productivity in Australian enterprises and pay, which is where it comes to CEOs and executives, whose remuneration bears no relationship whatever to the work they do and the contribution they make to the enterprises they are charged with running and, indeed, to the wellbeing of the Australian economy overall. Today in the banking royal commission we see yet more evidence of that, when the CEO of the National Australia Bank spoke today of the problem of executives looking at one- and two- and three-year returns, not about the wider metrics. That builds on a much bigger basis of concern about how our banks are operating.

I'm so pleased that, thanks to Labor's advocacy, we have seen this side of corporate Australia and executive greed exposed. I'm also pleased that Labor has responded to this wider issue and has a response which makes clear, as Greg Jericho did in The Guardian again earlier this month, this notion of the gap between CEO pay and performance and CEO pay and that of workers in their businesses. A society where it takes the average CEO less than five days to earn the average full-time annual wage is of concern to me and, I suspect, all Australians. That is one of the reasons why the member for Fenner, the shadow minister, has put forward the proposal for disclosure. These ratio disclosure proposals haven't come out of the blue. They come out of work that Labor did when we were last in government, including introducing the two-strikes provisions. It is so important we offer more transparency so that Australians, including shareholders, can look at this and judge for themselves the gap between CEO pay and CEO performance.

We can ask ourselves, as a society, is greed good and how much is enough? I think that when Australians look at these questions they will ask themselves why the government is not responding. Why is the government not even putting up a speaker on this most important debate? It shows, once again, that we have a government that is completely out of touch with working Australians, completely out of touch with any sense of a decent society and a decent economy.

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

I'm very proud to rise today to speak in support of this motion on CEO remuneration. This motion fundamentally goes to the issue of inequality. The Australian people need to understand, when we discuss the concept of inequality and the growing inequality that we are seeing across the Australian community, that the government hasn't even shown up to debate it. The government has abandoned the field when it comes to addressing issues of inequality in this country. You don't need to hear me say that to understand it. If we look at what is happening in Australia now with the rising levels of inequality, it is writ large when we look at the growing disparity between the remuneration of Australian workers and the remuneration of those who run some of the biggest companies in this country.

Average total pay of ASX 100 CEOs last year rose nine per cent. Australian workers would cry to get anywhere near those sorts of wage rises. In fact, that nine per cent was four times higher than the growth in average wages that we have seen in Australia. The median pay for a CEO of an ASX 100 listed business is more than $4 million. But, remember, that's just the median. We've got examples across the Australian corporate landscape that are far higher. The CEO of Domino's, who of course employ some of Australia's lowest paid workers, made $37 million last year. The former CEO of the Commonwealth Bank earned $12 million. That $12 million for the CEO of one of Australia's biggest companies, Australia's biggest bank, made the remuneration of the other CEOs pale into insignificance. There was not even, truly, a market justification for paying a bank CEO $12 million, let alone a consideration of all the misconduct and the destruction of people's lives that have happened at the hands of Australian banks.

The $4 million median salary for ASX 100 CEOs is 75 times the average pay of a full-time worker in those companies. It would take someone two full careers to get close to earning what a CEO earns in a single year. It wasn't always thus. We only have to go back to the 1970s to see that the CEOs of our then-largest companies—companies like BHP—were being paid only six to seven times more than the average for their workforce. This motion is not about cutting wages. All this motion is about is calling on the government to ensure that we have transparency in reporting on the inequality that we are seeing in Australian workplaces, making it clear just how highly, in comparison to their own workers, CEOs are being paid. That is something of which we should take note. We don't need to cut company profits. We don't need to cut dividends to the shareholders and the investors in those companies. But what companies need to think about and what their shareholders should be made very well aware of is just how much of their profit, their revenue—which is used to pay for their workers, their management teams, their consultants and everything else—is going to one individual at the top of the chain, as opposed to the many, many workers that those companies employ.

The crux of it is this: if we want to see real economic growth in this country, ordinary Australians need to have money in their pockets to spend. I wouldn't even know how to spend $12 million of annual salary, but I would certainly not be spending it through the economy if I were earning it. It would end up in other investment vehicles. But, if that money goes into the pockets of ordinary working Australians, it will be spent. That will see real economic growth occur and it will start to see this growing inequality addressed. It will mean that we become a more equal place to live, because we will close that ratio as people become more and more aware of just how much of this money is going into the pockets of CEOs and not into the pockets of ordinary working Australians.

Debate adjourned.