Bob Brown (Tasmania, Australian Greens) Share this | Hansard source

As I said in the second reading debate, the Greens view this legislation with some apprehension. It puts $2 billion of public money up, to be matched by the four banks putting in half a billion each. That is, under the existing legislation, going to be governed by a board of five, one each from the big banks and one from the Commonwealth—which is out of kilter. We have an amendment to make now to give the Commonwealth two votes there, and they will have a veto. But it also brings into play the potential for a further $26 billion of taxpayers’ money, because that is the provision for guarantees for loans should it be required. In other words, the Commonwealth commitment of taxpayers’ money in this legislation is bigger than the commitment by the four banks put together. Where will the money go? It will go to developers of such things as shopping centres and other private enterprise developments where the concern was—which I do not think is now nearly as strong—that such developments would be financed by foreign loans, and that the foreign lenders at a time of recession may not be prepared to renew the loans. It is to put up a guarantee from the taxpayers to the private sector developers that, come what may, they will get new finance.

There are all sorts of ramifications with legislation like this as to the availability of money to other potential borrowers and the fact that small business is left out altogether. Be that as it may, the Greens have consistently said that we are responsibly aware that the government is there to govern, it is a time of enormous crisis on the economic front, and we as a nation are in recession. We have, I think, potentially reached agreement about rebalancing the board by having six officers on the Australian Business Investment Partnership—an added one from the Commonwealth. I think that is very wise, because it will mean that instead of a single Commonwealth officer being there to negotiate with four private sector officers—one from each of the banks—there will be two Commonwealth officers. We do not have to be too schooled in social dynamics to know that that will give the Commonwealth a much better bargaining position and, if necessary, a much wiser ability to use the veto.

The other important amendment that I put forward on behalf of the Australian Greens, in the absence of action from the government, is:

The annual salary of any officer of any other party to the arrangement is not greater than $1,000,000.

That is, the development companies that are potentially entertaining getting a guaranteed loan at the risk of the taxpayer should not include people who are then taking home more than a million dollars a year. It is an embarrassingly high figure, when one looks at the Prime Minister’s income of around $400,000. This is presuming that there is a developer out there, a manager of a development corporation or a development, who is doing work that is worth two and a half times that of  the Prime Minister. Obviously that is not the case. But this is to thwart taxpayers’ money being used to back up what the Prime Minister himself has described as the ‘obscene’ executive officer salaries we have seen in Australia in recent years.

While it is not germane to Australia, this got right out of hand in the United States, where the president has taken some action. I want to quote from a letter from Attorney-General Cuomo of the State of New York to the Chairman of the House Committee on Financial Services in Washington, the Hon. Barney Frank. It outlines Merrill Lynch bonuses for last year. People will know that Merrill Lynch was a casualty of the recession, or maybe a big cause of it. The letter says:

Merrill Lynch’s decision to secretly and prematurely award approximately $3.6 billion in bonuses, and Bank of America’s apparent complicity in it, raises serious and disturbing questions. By December 8, 2008, Merrill and presumably Bank of America must have been aware that the fourth quarter and yearly earnings results were disastrous. Indeed, on January 16, 2009, the companies announced that in the fourth quarter alone Merrill Lynch has lost $15.31 billion, and more than $27 billion for the year. In the face of these losses, federal taxpayers were forced to help Bank of America acquire Merrill. Thus, Bank of America also announced on January 16, 2009, that the federal government would invest $20 billion in the deal and provide $188 billion in protection against further losses primarily from the Merrill Lynch portfolio. These investments were in addition to the previous $25 billion in TARP funding that taxpayers had given to Bank of America.

Now listen to this. The Attorney-General of New York, writing to the committee on Capitol Hill, said:

Bearing in mind that Merrill moved up its bonus payments in advance of its announced $15 billion quarterly loss and $27 billion annual loss, we have determined that Merrill Lynch made the following bonus payments:

• The top four bonus recipients received a combined $121 million;
• The next four bonus recipients received a combined $62 million;
• The next six bonus recipients received a combined $66 million;
• Fourteen individuals received bonuses of $10 million or more and combined they received more than $250 million;
• 20 individuals received bonuses of $8 million or more;
• 53 individuals received bonuses of $5 million or more;
• 149 individuals received bonuses of $3 million or more;
• Overall, the top 149 bonus recipients received a combined $858 million;
• 696 individuals received bonuses of $1 million or more.

You cannot relate that experience directly to Australia, but we do have examples in Australia, if we look at the year 2008, of what the Prime Minister called ‘obscene’ CEO payments. He was not directly referring to these payouts—but I will—which may well be involved directly in the largesse that this particular bill gives to these companies at the risk of the taxpayer. The CEO of ANZ Bank, Mike Smith, got $6 million. The CEO of the Commonwealth Bank, Mr Norris, got $8.66 million. John Stewart, of National Australia Bank, got $4.28 million. In the development area—and that is where this bill is directly aimed—Frank Lowy of Westfield got a $15.88 million annual salary and, in Mirvac, Mr G Paramor got $2.8 million. That needs to be reined in.

We believe in free enterprise and we also believe in a fair go. I have been putting forward the idea that there should be a cap on the most excessive of CEO payments since at least 2004-05. It seemed a bit of a cry in the wilderness during the boom times, but now we are in a recession, when money is scarce and taxpayers are concerned for their future and indeed a lot of them have become unemployed or are seeing their small businesses collapse. This legislation aims to give financial help, indeed bailouts, to some of the biggest developers in the country if there are defaults on foreign loans. If we are going to do that, then the quid pro quo should be that those developers pull their belts in and accept a reasonable—by anybody else’s standards—if not very, very comfortable income of a million dollars or less. We the Greens do not see that as anything other than a fair go.

I have written to the Prime Minister on a number of occasions on this issue. I have in this legislature put forward a number of motions and amendments to introduce much more relaxed caps than this one—on one occasion a cap of $5 million. They have been routinely voted down by both the opposition and the government. This is put forward not as some gesture. As I said in my speech on the second reading, this is a serious amendment and, as far as we are concerned, support for this legislation depends on movement from the government.

Yesterday I had some conversation with officers of the government and suggested that they come back with an alternative amendment if they cannot support this one. I have got none. I have not even got a suggestion of one. I must take it from that that the Prime Minister is simply not interested in taking any real action at all on what he calls the obscene CEO payouts. Well, we are.

I would expect that the government, in the absence of any other suggestion—but echoing the Prime Minister’s alarm about the greed that sometimes overtakes CEOs in formulating their own magnificent payouts—will support the Greens amendment. I would expect the government to do that and take it as seriously as we of course take this piece of legislation. It involves large amounts of money and very considerable potential risk to Australian taxpayers. The amendment to put a cap of $1 million on the CEO payments of companies who might receive guarantees or loans under this legislation ought to be heeded seriously by the government and supported.

Progress reported.