Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That these bills be now read a third time.

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

The Greens have made it very clear to the Prime Minister, to the Treasurer and to the government that we expected a cap to be placed on what the Prime Minister described as obscene salaries, at least for developers who potentially were going to receive largesse from this multibillion-dollar fund being established at risk to the public dollar. We have made it very clear for many weeks now that we would not support this legislation unless there were a reasonable cap—we were prepared to negotiate that—placed by the government. That came in the wake of a number of public statements of very great strength by the Prime Minister about his disapproval and the government’s disapproval of what he termed obscene, multimillion-dollar take-home packages that we have seen in recent years. However, when it came to the crunch, the government had no such intention.

I want to make clear again that I have written to the Treasurer in the last 48 hours and said we wanted the cap of $1 million to be placed on executives of development corporations who were going to receive public largesse and guarantee. That guarantee begins with $2 billion, but it could extend up to, in effect, $28 billion of public moneys; they are vast sums we are looking at here. The Treasurer has declined to see if a higher cap could be placed and has not requested further negotiations in the last 48 hours. You will know that the Greens have in the past moved variously for a cap of $5 million to be placed on the take-home pay of CEOs. What Obama is prepared to do in the United States Rudd is not prepared to do in Australia. The President of the United States has placed a cap on the take-home pay of executives of failed corporations that are being bailed out by public largesse. That is what the Greens ask for here. That is what the Prime Minister of Australia has refused to go through with.

We do not know who these developers are. What we do know is that we are only dealing with situations where a company is in deep trouble, it has been unable to refinance loans it has taken out to get a development underway and it is about to fail and is calling on the public purse. Those are circumstances where CEOs ought to be required to take a cheque which is not the open cheque of the past. A million dollars, three times the prime ministerial salary and effectively double where Obama has placed the limit in the United States, is eminently reasonable, but there is no defence of any figure by this government. We are talking about a Labor government. We are talking about public funds—billions in public funds—being injected into the private sector when an as-yet-unknown but potentially very large failure happens in the corporate sector. The government is not prepared to put a check on the CEOs who have overseen the development to the point of that failure. We disagree. We are not simply going to tick off on this. We are not simply going to say, ‘Oh well, the government gets its way.’ No, it does not. There is a very important public principle and a hugely important public interest here.

You will not find the CEOs of public hospitals that may need this money demurring at a limit of $1 million on their pay. You will not find educators in the public system doing so. You will find no-one in the public system anywhere in Australia, including the Prime Minister and the heads of the states, who are getting anywhere near $1 million a year, yet this Labor government says, ‘But we’re not prepared to put such a cap on the captains of a development corporation which is failing and which requires the diversion of public funds away from education, health and other essential services to bail them out as a result of their failure to renew loans.’

We have indicated that, and I repeat this, if those circumstances arise, we will look at that because we would be concerned about workers who may lose their jobs as a result of the failed judgments and decisions of the CEOs. When that moment comes, we are not going to give the blank cheque the government has now asked for in this chamber. We will require the government to put a cap on the salaries of the CEOs of that development corporation, whatever it might be, if it is going to get hundreds of millions or billions of dollars of public funding to bail it out.

I note that there is not the urgency in the air for this legislation that there was when it was first mooted by the government. I do not think the government particularly cares if this legislation gets through at the moment. It is looking at a much less likely event now than may have been the situation in March. All that aside, I say to the government: do not take us for granted on this. We are standing here in the public interest on a matter of very important procedure and fairness to the Australian public, who are going to fund a future potential bailout. We will expect the government to write into any future bailout a reasonable expectation that the CEOs do not get rewarded for that failure. If Obama can do it, Rudd should do it. Obama has done it; Rudd has not done it. The Prime Minister of Australia has not accepted a reasonable public interest point of view, which the Greens are putting here today. We will not support this legislation without that cap and that reasonable public interest being built into it.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I will make a contribution because it is apparent the legislation will be defeated. I have already engaged Senator Brown not just on this occasion but on other occasions about the different circumstances in respect of salary caps and bailouts in the US and some other places compared to Australia, so I will not repeat that argument again today. It is disappointing these important bills will not pass and, as a result of that, ABIP will not be up and running to provide a source of liquidity to viable commercial property firms should the need arise. Australia is more exposed to the potential fallout from the global financial and economic crisis as a result of opposition to the bills. Naturally, the government hopes that the possible funding gap that might arise in the commercial property sector that gave rise to the ABIP initiative does not materialise and that liquidity problems do not result in the failure of good Australian firms and the loss of Australian jobs.

The bills have faced extensive scrutiny in the Senate and through the Senate Standing Committee on Economics, and there have been a number of amendments to the legislation which we have accepted, including in the area of executive pay. But those amendments in that area did not meet the concerns of the Greens. The overwhelming evidence has been that ABIP would be a valuable and effective measure with sound governance and financial arrangements to safeguard the interests of taxpayers, while helping support Australian business and jobs in what are quite extraordinary times, given international financial and economic events. Obviously, the government will continue to closely monitor market conditions and will take action if necessary to support the financing of commercially viable firms in the commercial property sector. It has been the approach of this government to be prepared and to intervene where there are issues of market failure in the current circumstances. I do hope that, if this legislation is re-presented, Senator Brown will have cause to reconsider on behalf of the Greens. But we will see if that eventuality occurs.

The only other point I want to make is that the crossbenchers—the Greens, Senator Xenophon and Senator Fielding from Family First—constructively engaged with the government. There was significant discussion I know and I do thank them for that. The Liberal opposition just said ‘no’ out of an ideological approach, as they have said ‘no’ to anything in terms of intervention in these very serious financial and economic times. Just sitting on your hands and doing nothing is the way to see a much worse recession eventuate. That was the approach taken in the Great Depression, as I recall—not directly, of course; I was not alive then but certainly what I know from stories of that period. You cannot let banks fail. Governments do have to intervene proactively in terms of stimulus packages to cushion the economy and to prevent the collapse of consumer demand and property prices. We make no apologies for this type of approach. We believe in being prepared to cushion the economy in these very, very serious economic times.

Question put:

That the motion (Senator Sherry’s) be agreed to.