Senate debates
Wednesday, 18 March 2009
Questions without Notice
Executive Remuneration
2:32 pm
Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source
My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister update the Senate on actions that the Rudd Labor government is taking to address the incredible level of executive pay packages, particularly concerning the growth in the size of termination payments, which are also known as golden handshakes?
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
Today the Treasurer and I announced a package of major reforms that will curb the level of what are known as golden handshakes. The community has been rightly offended by the level of the termination payments that have been made over the past decade in particular. These are commonly known as golden handshakes. This is unacceptable when we see workers losing their jobs. We see rewards for failure via these massive golden handshakes that have developed over the past decade. They are often made as a reward for failure. Today’s reforms that have been announced will empower shareholders. There will be a binding vote. Earlier today I described this new culture and said that the retirement gold watch has been replaced with a truckload of gold bullion in the executive payouts cases we are seeing on termination.
I will go to the key reforms that we have announced today. Under the current law that was left to us by the former Liberal government, who did nothing, only where the pay for company directors is seven times their total pay package do they need to seek shareholder approval. We are reducing that to be only one times that amount. We are also reducing the base pay from the salary package to the basic pay. There will be two major changes to the way in which these payments are calculated. Secondly, the Liberals’ law only applies to company directors. We will be expanding the coverage of these new requirements to include all those executives in the company remuneration package. Thirdly, we have identified a loophole that was left to us by the Liberal Party. (Time expired)
Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source
Mr President, I ask a supplementary question. Can the minister also inform the Senate of any other steps the Rudd government is taking on the issue of executive pay?
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
As I was about to say, we have identified a loophole that was left to us by the former Liberal government after 12 years of inaction. The loophole we have identified relates to Pacific Brands, which have been in the press recently. Pacific Brands gave their previous CEO a golden handshake of $3.4 million. I am advised that Pacific Brands called this termination payment a ‘retirement payment’. Consequently, this loophole that was left to us by those opposite is going to be shut down. The Rudd Labor government today announced decisive reform measures—
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
What did those opposite who are interjecting do over 12 years? Nothing; they did nothing to reform this area. This government is determined to reduce these golden handshake determinations.
John Hogg (President) Share this | Link to this | Hansard source
Order! When there is silence on both sides, we will proceed with question time. Senator Sherry, continue.
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
Thank you. (Time expired)
Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source
Mr President, I ask a further supplementary question. Can the minister update the Senate on what the attitude of the former, Liberal government was to the regulation of executive pay and, in particular, golden handshakes?
John Hogg (President) Share this | Link to this | Hansard source
Order! Senator Macdonald, you will get the call when there is order on both sides.
Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source
Mr President, I raise a point of order. We would all love to hear the answer, of course; but, as a matter of the standing orders of this Senate, how is this in Senator Sherry’s portfolio responsibilities?
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
On the point of order: corporate law.
John Hogg (President) Share this | Link to this | Hansard source
Order! The time for debating this is later. There is no point of order. Senator Sherry, please answer that part of the question which is relevant to your portfolio.
George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source
John Hogg (President) Share this | Link to this | Hansard source
Order! Senator Brandis is entitled to be heard in silence.
George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source
Mr President, on a point of order: the question, as I heard it, was that the minister was being asked to advise the Senate about the attitude of the previous government to a particular matter. That was it. That was the only topic of the question. Now, it is not conceivable that the minister’s view of the view of a previous government on a particular matter could be a matter arising within that minister’s portfolio, since the previous government has expired. Senator Sherry has no jurisdiction in relation to matters dealt with by the previous government.
Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source
Mr President, on the point of order: I have never heard the Howard government described as having ‘expired’ before, but I am happy to take up the suggestion! Like Senator Brandis, I am not able to repeat exactly the words of the question asked by Senator Farrell, but clearly he referred to alternative policies. The question was directed at alternative policies impacting in Senator Sherry’s portfolio, and I would argue therefore that the question is in order.
John Hogg (President) Share this | Link to this | Hansard source
I have already indicated that Senator Sherry need only answer that part of the question that refers to his portfolio, and those parts that are not relevant he should not address.
Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source
It is a pity such legally incisive minds as Senator Brandis’s were not brought to bear on solving this problem for the almost 12 long years his party were in government and did nothing. You did nothing in government—lots of talk about cracking down on executive pay and golden parachutes, but you did nothing. In this very Senate I remember Senator Conroy, four years ago, presenting this package to the Senate in respect of a corporate law bill, and Mr Costello saying, ‘No, we are not going to hold executives accountable for these sorts of golden handshakes.’ Senator Coonan opposed this package of reforms four years ago when she described it as throwing the baby out with the bathwater. You said we could not crack down on senior executives’ termination payments because that ‘throws the baby out with the bathwater’. That is a direct quote, Senator Coonan—how you described this measure four years ago. (Time expired)