Stephen Parry (President) Share this | Link to this | Hansard source

I inform the Senate that at 8.30 am today Senators Gallagher, Hanson and Siewert each submitted a letter in accordance with standing order 75 proposing a matter of public importance. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Hanson:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

Due to excessive remuneration paid to the CEO and their Directors, the need to remove and replace the Board of Australia Post.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

In recent weeks it has been brought to the attention of the Australian people what the CEO of Australia Post is being paid. It was a complete outrage. It was raised last year but nothing much happened about it. It was raised again this year. In 2009 the board of Australia Post reported in the annual report that the managing director and some key senior executives were all employed under ongoing employment contracts, which could be terminated with 60 to 90 days notice. In the case of the managing director, he would be entitled on termination of his contract to 60 days pay at 1.5 times his base salary. We can only guess what it is now. Apparently, they are reluctant to put in full reports. You ask the question: why? Since then the board has progressively provided less and less remuneration information.

Seven years ago, the Australia Post annual report named the highest paid individuals and reported their individual remuneration. In 2016 we know only that 20 people shared a pot of $18,702,653. We had to rely on the media to find out that the managing director was paid $5.6 million. He did not need it, because he gave over $2 million to charity. The payment of $5.6 million to the managing director of a government business enterprise is excessive. At some level, the board must know that payments to senior staff reduces the dividend payable to government, which was just $20 million in the period 2015-16. The Prime Minister's solution to this mess is novel. He suggests the Australia Post's managing director give back any amount his conscience advises.

The board members of Australia Post are weak and lost. The Prime Minister's idea of a voluntary return of salary already paid to the managing director of Australia Post and other key executives has little chance of success. It is self-evident to every Australian, except the board members of Australia Post, that $5.6 million is excessive remuneration for the managing director of Australia Post. The Australia Post board has proven itself incapable of bringing remuneration into line with community expectations. The Prime Minister's solution is unworkable. I have no choice but to try and fix the problem with a private member's bill, if I get the full support of my fellow senators, who must also be appalled with this disgusting remuneration package.

The board's failure to manage remuneration is just a symptom of a wider failure at Australia Post. The postal network is an essential service for the elderly, the homeless, others without a fixed postal address and people in rural and remote areas of Australia. Australia Post is required by law to provide a postal service even where it is unprofitable to do so. This is its community obligation. It is rural and remote post offices, which are often owned and managed by one person, which provide the essential postal service. Shockingly, these small businesses have found themselves bullied by Australia Post, locked into unfair financial agreements and unable to get paid for work done under contract. The board of Australia Post has failed to implement the recommendations made by the 2014 Senate committee report titled Performance, importance and role of Australia Post in Australian communities and its operations in relation to licensed post offices.There is no doubt that the current board of Australia Post needs to be replaced. I would expect the new board members to implement the Senate's recommendations.

The current business model which operates at Australia Post needs to change. It is unAustralian to shift the responsibility for meeting non-profitable community obligations to franchisees in rural and remote Australia and then not pay them for all the work they do. It was never intended that the board of Australia Post, with its overpaid managing director, would misuse the market power given to it by the parliament. The unconscionable contracts with Australia Post franchisees must be changed so that it is not possible for someone to work for half an hour and get a payment of 34c. The government's usual response of writing to the board and calling the chairman to the Senate to answer questions is a demonstrated waste of time. The Labor Party attacked me for supporting some of the government's measures in the omnibus bill, saying that it is hurting pensioners and the needy. Shutting down the Australia Post board and their remuneration would clearly not hurt pensioners, so I expect their support. The Minister for Finance and the Minister for Communications are the two shareholder ministers in Australia Post. It is time for a 'please explain' to Australia.

James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Can I begin by thanking Senator Hanson and One Nation for raising this issue in the chamber and for their public advocacy about this issue because I absolutely share their concern about both the remuneration received by the CEO of Australia Post and, even more importantly in many ways, the way in which Australia Post tried to conceal that information from the public to prevent exactly this sort of debate from occurring in the chamber and in the community.

I should make two quick relevant declarations. Senators may be aware that their former colleague and my predecessor, the much beloved Michael Ronaldson, was recently appointed to the board of Australia Post, although this is not something that I have canvassed with him. And I have been lucky enough to chair the relevant committee, the Senate Environment and Communications Legislation Committee. I can share with the Senate that, unfortunately, I will no longer be chairing this committee as I am going on to other things, but I will come to that in a moment.

As senators would be aware, in the last round of Senate estimates, Senator Urquhart and Senator Dastyari asked a series of questions to the CEO of Australia Post about the executive remuneration policies at Australia Post. In my view it should not have been necessary for them to ask these questions, because the standard practice at Australia Post in the past has been to publish in their annual report this information, but Australia Post recently ceased to publish that information for reasons which I will come to in a moment, so it was necessary for senators Urquhart and Dastyari to question them on this. At Senate estimates the CEO took the questions on notice, was not able to provide the questions immediately and undertook to get back to the Senate with his answers. Australia Post took the full amount of time available through the estimates process before they replied to the committee, which is their right, but I suspect that it would have been easy and quick for them to find this information. I do not think it would have taken much digging for them to find this information.

When Australia Post did decide to provide the information to the committee, they requested that they do so only on the basis that it be given to us confidentially. This is a deeply concerning thing which I spoke about in the Senate last week when we first tabled this information in the Senate. It is disturbing for a number of reasons. Firstly, as all senators are aware, Senate estimates is required to be conducted entirely in public. It is not permissible for the Senate to receive information during estimates that is not public. Secondly, it is up to the Senate committee itself to determine whether in normal circumstances a witness can provide information on a confidential basis. It is for the Senate committee to invite the witness to provide it on a confidential basis; it is not for a witness to take it upon themselves to provide it on a confidential basis, and yet that is what Australia Post requested.

The committee, through me and the secretariat, engaged in an exchange of letters over a number of months with Australia Post to ask them to substantiate their claim that it was necessary that this information not be made public. I have to say I was disappointed with the sorts of reasons that Australia Post provided to the committee, and that was one of the reasons the committee saw fit to release all the correspondence and the information provided by Australia Post last week in the Senate. Among the reasons that Australia Post requested that the information remain confidential was that it could potentially damage the organisation in a commercial sense, that it could breach the privacy of the individuals involved and that it could damage the reputations of the individuals involved.

Australia Post also asked the committee, if we were to decide to release the information, to give them a grace period of about a week before releasing the information, to allow them to prepare some stakeholder management before it was to become public and, obviously, an item of interest in the media. This was something which was also of great concern to the committee. It is not an option for the committee, once it has decided to receive information and to publish it, to withhold publishing it for the convenience of an organisation which was obliged to provide that information in public in the first place. I suppose we have seen, in the media coverage over the past week, why Australia Post was reluctant to have this information in public and why they wanted time to manage their response. But just because there is tough public scrutiny of the expenditure of public money does not mean that it is acceptable for the Senate to participate in shielding that information from the Australian public.

I am personally very glad that this information is public and I am glad we have had the debate about it that we have had over the past week. My view is that it is the role of the board of an organisation to set the remuneration policies for that organisation, including a government business enterprise, but they should do so mindful of the fact that it is a government business enterprise, that it is wholly owned by Australian taxpayers, that over its many decades of history it has received substantial assistance from taxpayers, particularly in the form of monopoly protection from competition, and that its current profitability and current performance are inextricably linked to the taxpayer support it has received over its history. So to argue, as Australia Post did, that in some way it should not be required to make this information public, because Australia Post has made disbursements to the government and has been a source of revenue for the government in recent years, was another concerning aspect of our interaction with Australia Post. The very fact that taxpayers do receive money from Australia Post and it is a significant sum of money is one of the reasons we are entitled to take interest in this matter.

On the merits of the remuneration of the CEO in particular, I agree with comments made by the Prime Minister and many others that it is excessive, and I think any fair assessment of the facts, looking internationally and in Australia, demonstrates that it is excessive. Many people in Australia in this debate have focused on the salaries received by comparable post organisations around the world, meaning senators would have heard that Canada Post pays their chief executive about half a million dollars Australian, the US Postal Service a little bit more than half a million dollars Australian, the French postal service A$634,000 and the privatised UK Royal Mail pays its chief executive A$2½ million, which are all substantially less than Australia Post pays its chief executive, even though these organisations are comparable in size, scale and complexity. But actually I am very interested in comparing it to the private sector alternatives, because some of the arguments made in the media by people advocating on behalf of Australia Post in recent weeks have concentrated on the fact that the CEO of Australia Post could command a very good salary in the private sector. I do not doubt that for a moment, but it is instructive to look at how much organisations of similar complexity and size which are much more profitable than Australia Post pay their CEOs.

The three comparisons I have particularly in mind are three of the major banks: the ANZ, the National Australia Bank and Westpac. Each of these organisations paid a similar amount of remuneration to their CEOs in the most recent financial year, ranging from just a little bit over $5 million at ANZ to just a little bit less than $7 million at Westpac, and so they are in the same ballpark as the CEO of Australia Post yet these organisations have revenue many times higher than that of Australia Post, have more employees than Australia Post and certainly are far more profitable than Australia Post. In the case of ANZ its revenue is $21 billion; in the case of NAB its revenue is $20 billion; in the case of Westpac it is $22 billion, compared to $6.6 billion for Australia Post, and these organisations all posted very healthy multibillion-dollar profits that were returned to their shareholders, in contrast to the very slim profits provided by Australia Post. I appreciate that Australia Post is operating in a difficult and changing commercial environment and I would not begrudge in any way a very generous remuneration package for the CEO of Australia Post. But I think the $5.6 million that the Australia Post board has decided was appropriate to pay the CEO is the kind of decision a board would make only if they knew that it would not be something that would be publicly scrutinised. I do not think any board member in their right mind would think it would be appropriate to pay a wage like that, if they knew it was going to be subject to public scrutiny.

Listed companies in Australia are legally required to reveal the remuneration packages of their senior executives and I do not think we should expect any less a standard from a government business enterprise. In fact, I think we should expect a higher standard, given the fact that taxpayers' money is involved. But listed companies, through the Corporations Act, are also subject to a vote by their shareholders, and if a remuneration package of the senior management is voted down twice at a listed company there is an automatic spill of the entire board of the organisation. I am not proposing that the federal government spill the board of Australia Post—certainly not now or any time soon—but I am asking the board of the Australia Post to take their obligations very seriously and disclose relevant information at the upcoming Senate estimates. Unfortunately, I will not be there as I am moving to the Finance and Public Administration Committee, but I have every confidence in my colleagues in the Senate to do so.

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to contribute on this matter of public importance today as I believe the issue of the executive remuneration is one that the community is interested in, and it is a matter of significant public debate. In relation to the specifics of the MPI, which singles out one CEO and the board of Australia Post, I support the comments the Leader of the Opposition and others in the opposition team have made—that the level of remuneration is certainly out of touch with community expectations. I think the issue about not being transparent about the total remuneration package is an issue that certainly needs continued focusing on, and I certainly support Senator Paterson's comments there.

When spending taxpayers' money there comes with it the need to be transparent and accountable about that money, how it is spent and what it is going to. It is very easy to do that as there are standard ways in which that information is provided, whether it be through quarterly or annual reports of organisations. It is not onerous and it certainly is not red-tape regulation. It is a very important measure for instilling public trust and confidence in areas where taxpayers' funds are being spent.

I think we also have to acknowledge that some of the broader community concerns about executive remuneration have to be seen in context, where we have rising inequality and growing disadvantage, and where a lot of the political debates are around cuts and savings and what those cuts and savings are targeting. Vulnerable members of the community, whether they be low-income families or pensioners, people who have kids in school, or people who use the hospital system, we are all being told we need to tighten our belts and ensure that public money is being spent wisely. Then, people would read headlines about one public official, in a sense from a government business enterprise, earning that type a salary.

When I was reading on this topic today I found it interesting that both the United States and the United Kingdom have made changes to their remuneration reporting structures. From 1 January 2017, American companies are now required to disclose the ratio of pay of a CEO's annual total remuneration to the median annual total remuneration of all company employees. In the UK they are also subject to a variation of the CEO pay ratio rule, with relevant regulations requiring disclosure of CEOs remuneration, also with their employees. In Australia, companies do not have to disclose this ratio, although, as Senator Paterson said, they do disclose information about remuneration for executives. The author of the article, Associate Professor Julie Walker from the University of Queensland, makes the point that disclosing the ratio provides greater transparency around CEO pay and places some constraints on escalating executive remuneration. CEOs in the US are paid around 300 times the median employee wage, while in the UK the ratio is roughly 183 to 1.

I will mention briefly the issue of transparency. The salary information has been released publicly as a result of Labor's pursuit of the matter through the relevant committees. It is essential on issues such as these, particularly when it involves the spending of taxpayers' money, that politicians, senior executives of departments and general expenditure are all subject to appropriate scrutiny in the public's eye. This is also appropriate for the CEO of Australia Post.

I think it is fair to say that the rate at which several CEOs are paid in Australia is also seen as being too much and out of touch with community expectations. For example, look at the national average wage in Australia—it is approximately $81,000—and compare it with the salaries and bonuses of CEOs in Australia. Commonwealth Bank CEOs earn 67 times the average salary. The CEO of Fortescue owns 64 times the average salary. For Ramsay Health Care it is 56 times the average salary. For Wesfarmers' CEO it is 54 times the average salary. For Sonic Healthcare it is 54 times the national average salary. The list goes on and on. Even one of the lower-paid CEOs on this spectrum—at Nine Entertainment—still owns 12 times the national average salary. I think we have heard from constituents—I certainly have here in Canberra—that they believe these levels of remuneration are very difficult to justify and are certainly too high. I think there is something to that. It is something we should be aware of.

Coming back to the issue that has been identified with the CEO of Australia Post, I think it is important to note, as part of this debate, that we on this side of the chamber also acknowledge the challenges that Australia Post faces with its business. There has certainly been a big decline in revenue and an increase in competition, and obviously fewer letters are being sent. You need to balance these discussions; you need to have rational discussions—it cannot be just the shock and awe headline. You need to understand that you need to attract good people to the role of CEO—you need someone who is experienced, who can deal with the very significant business transformation that is occurring at Australia Post, and who can lead that organisation and take them through all of those challenges and still return a profit for the taxpayer.

I certainly do not underestimate the challenges that face the Australia Post CEO, and I think that when executive remuneration for a GBE is being settled appropriate steps should be put in place to have the job scoped and independently assessed on where it would fit within other executive structures. Again, it is not hard to do. Most governments run GBEs, and there are processes that can very easily be put in place that scope and weight a job and make recommendations to the board about appropriate remuneration. If that was followed in this case, it would be interesting to see how that final salary was arrived at. But we should give the opportunity to the board to explain the remuneration settings, not just for the CEO but for other executives in the organisation, and, indeed, to explain how board remuneration is set as well. That is something that I looked at pretty closely here in the ACT with GBEs like Icon Water, which went through a similar process a couple of years ago with concerns around the remuneration of the chief executive. They went through a process—I think a good process—to ensure that the remuneration level that was set was justified with an appropriate assessment of work-level standards conducted independently of the board. Again, I think we also need to acknowledge that this is a time when we are seeing flat wages growth, seeing jobs lost, seeing high levels of youth unemployment and seeing constant public dialogue about cuts to pensions, people having to tighten their belts and the need to rein in government expenditure. When that is 95 per cent of the public discourse in this country, and then people turn a page of the paper, if they do that anymore, or swipe their iPad, and see that someone earns $5.6 million, it just does not make any sense to them—and I completely understand that.

I think it is worth this chamber continuing to look at executive remuneration and look at how those decisions are taken and, absolutely, to make sure that there is appropriate transparency and accountability and really good processes in the boards of management for how executive remuneration is dealt with in their agencies—that there is a policy in place, there is independent review, and every single salary that is subject to a particular contract of employment is justified by a very thorough process which looks at the work that is being done and the adequate remuneration that should be paid for that job—nothing more and nothing less.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am happy today to debate executive pay. In this time of inequality, it is absolutely essential that we have this public debate. I am happy to debate the functioning of Australia Post, and I am on record as saying that we need executive pay cuts in both the public and the private sector. I have gone head to head with Australia Post and Ahmed Fahour at least a dozen times over the treatment of Australia Post franchisees, and, like Senator Ruston, I have been involved in a very long Senate inquiry process and in senate estimates.

But I fear that Senator Hanson has not raised this matter of public importance today because of her concern about runaway executive pay. I fear Senator Hanson has not raised this MPI because she is interested in the future of Australia Post. Senator Hanson has raised this MPI because Ahmed Fahour is a Muslim—a high profile, successful Muslim. It is no coincidence that the same senator who has publicly said we are being overrun by Muslims is targeting one of Australia's most successful and high-profile Muslims. Take a look at the One Nation website. There is an article there about Ahmed Fahour, calling him 'the Lebanese born CEO of Australia Post'—as if his ancestry is somehow relevant. The author of the article remains anonymous. The article mentions that he got a tax deduction for donating money to the Muslim museum, as if this is also somehow relevant. Also, Senator Hanson has been on record in the press recently talking about Ahmed Fahour's tax deduction for the Muslim museum. The One Nation website even names members of Ahmed Fahour's family as if they were relevant, and it puts the names of his family in capital letters, to highlight that they are Arabic surnames. Perhaps Senator Hanson should actually visit the Muslim museum, an excellent exhibition designed to break down ignorance and fear in this country around the Muslim religion and the Muslim community.

If One Nation really cared about rich people being paid too much, they would not have stood in this chamber, only months ago, and voted to give the wealthiest 20 per cent of Australians a tax cut—a pay rise. I certainly called out Senator Hanson on this at the time. She gave Ahmed Fahour—a CEO who, I agree, is paid way too much and that needs to change—a $315-a-year pay rise. He is a guy who earns five or six million dollars a year, or more. Senator Hanson and the One Nation party were happy to vote for him to have a pay rise. So do not think you can use this chamber for racist witch-hunts and get away with it—the Greens will call out One Nation every time.

This is an issue that we will face at estimates in a week-and-a-half's time. We will have the Chair of Australia Post, and then we can do our job properly and actually get some information from Australia Post so that we can actually make an informed decision. But let's be clear about this—and let me finish on this note—One Nation does not represent the battlers in this country. One Nation gave the wealthiest Australians a tax cut at a time of massive rising inequality. When we needed to be tackling inequality, they voted to cut social support for the poorest— (Time expired)

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I am pleased that Senator Hanson has put in the MPI for today on this particular issue. I would like to start my contribution to this debate by stating my personal position as a senator for Tasmania with regard to the issue of Mr Fahour's salary, and the transparency of GBEs and government entities more broadly. Personally my view is—and I am pretty sure it is consistent with that of the minister, the Prime Minister and the government—that the board needs to act. They need to address this issue and bring into step with community expectation the level of executive remuneration at Australia Post.

I cannot let the last contribution go without response—and, look, I am not going to commentate on Senator Hanson's motives and—

Senator Whish-Wilson interjecting—Go on, Jonno, have a go!

I will not be commentating on Senator Hanson's motives. I am more interested in ensuring that we actually get value for money out of taxpayer dollars, that government owned businesses operate as efficiently as possible and that the taxpayers of Australia have an understanding of how the businesses are using the money that is available to them, including for executive remuneration. Taxpayers are in effect shareholders.

My position is that Australia Post executive remuneration should be in line with community expectation, and I hope that the board acts and ensures that it is in line with community expectation. I am pleased that both Senator Lambie and Senator Urquhart are here. I am sure that travelling in the state of Tasmania they would have had much the same feedback as I have had. When you talk to the licensees and franchisees of Australia Post right across the state you understand just how hard they work to earn the small amount of money that they do in providing the service that they do. These are the people that make the organisation tick, the ones that get the letters delivered—in the case of contractors. And they are certainly not on $5.6 million, far less. I have had a number of franchisees, operators and licensees make that point to me that they feel particularly aggrieved at how the top end of the business is paying itself while the people that make the organisation tick are not getting the same sort of treatment.

You also have the users of the service, and we have seen constant increases in the price of stamps. I understand there are reasons for that, but it flows into a point that Senator Gallagher made before with regard to what the average punter would think when they see news of salaries of this magnitude being paid, in effect, to people that work for government entities—in this case, Australia Post. I think that is a fair point. There is all this commentary about people struggling to pay their power bills and make mortgage payments; people who have lost their jobs; keeping up with health insurance premiums and the like. What do those people think when they see an individual taking home a salary of $5.6 million? I think that is a fair question to ask.

If you do a quick google—and I did—with regard to what Mr Fahour's salary equates to in terms of weekly earnings, it works out to be something like $84,615 or thereabouts. Compare that to what I understand to be the average Tasmanian annual salary of $69,518, or roughly $1,336 per week. When an individual on that amount of money is trying to pay their bills, keep their lights on, feed their kids and get their kids to school and they see an individual earning that amount of money, you can understand the shock and the horror that they may express.

We have also heard in the debate already comparisons to CEOs of other companies, larger companies overseas, privately owned companies or publicly listed companies. I have two examples here. The CEO of Google—a company without which, I suspect, much of our research would not be done—earns $652,000 per annum plus stock options, and the CEO of Yahoo earns $1 million. Mr Fahour is well in front of them on those numbers.

But, again, back to the points made by individuals in our community. I have been provided with a copy of a letter to the editor of the north-west Tasmanian newspaper The Advocate.I wanted to read it out to show the sentiments that are being expressed in our home state:

The Australia Post CEO total pay of $5.6m per year is getting some attention, as it should. Australia Post argued to the Senate Estimates Committee that releasing the information would potentially damage the Australia Post brand.

Well yes. Australia Post has 33,000 employees, 17,000 contractors, and the combined salary benefits of its six (6!) most senior managers matched half its profit. This is simply obscene.

The fix is simple, and it is not the CEO gifting back a few million. All government businesses, State and Federal, must be required to report at least as extensively as shareholder companies. Shareholder company annual reports provide board and executive salaries in detail. They also meet continuous disclosure requirements.

As a sense check, the head of the US Postal Service, as 10 times the staff size, is currently paid around a 10th of the pay, 'just' A$540,000.

Can we please make sure the Turnbull Liberal Government response to the current heat in this issue is not to pressure the Aust Post CEO to gift back some pay. Although I am okay if that is part of it.

Fundamentally there is an issue of accountability of GBEs. That Australia Post argue non-disclosure with Senate Estimates indicates to me there is a cultural problem. I would also suggest that it would be extremely naive to assume that Australia Post is unique, and not representative.

Nothing bad, that I can see, other than the cost of reporting overhead that we already put on private listed businesses would be imposed.

If I am entitled to ASX reporting requirements on a $1K investment in a business of my choice, why am I not entitled to at least the same level of transparency and accountability of my taxpayer 'owned' share of Australia Post, which I cannot reallocate?

That was from David Owens from Parklands in north-west Tasmania. I think he made some valid points there.

Other speakers have also touched on the issue of transparency. I think Senator Hanson made the point about declining transparency. With Senator Urquhart in the chamber I would like to reflect on the difficulty we had at the last Senate estimates nailing down a time, and the amount of time we would have available to us, to interrogate the officers from Australia Post. As the chair, Senator Bushby, noted in the Hansard at the time, the estimates calendar is available from late the year prior and everyone knows when they are going to be required to turn up and provide evidence at Senate estimates. But in the days before, the committee was receiving advice that maybe the CEO and officers were not going to be available for the full time that they were requested to be there, or that he was only available for a certain time. It all adds to this concern around transparency. I think we really need to keep a check on that.

I think Senator Gallagher's point in the last contribution, that we should give the board the benefit of the doubt, is the right one. I am not sure I agree with Senator Hanson's call just to sack them on the basis of remuneration. I do expect them to act on that the community concern, the government's concern and the opposition and crossbench's concern. As the minister has already said on this issue, they do need to give more rigorous consideration to the remuneration packages offered to senior executives so that they are in line with community expectation. They need to be conscious of the reaction when these figures come out. As Senator Paterson said, there was a reason why they did not want to disclose this figure, and that was, I am pretty sure, that they knew the reaction they were going to get.

In terms of reducing executive remuneration, they should take that into account when seeking to reduce operational costs. The point was made by Senator Whish-Wilson in his contribution that instead of hitting up the franchisees every time, we should be looking at the top end as well. I think that is a fair point. Some of the figures quoted with regard to the work that franchisees and other operators do, where they get a minimal amount of money for some very heavy workloads, need to be taken into account when they are trying to manage their costs.

So I finish where I started off, calling on the Australia Post board to respond to these concerns to ensure that there is transparency and to ensure that executive remuneration of this organisation is in line with community expectation. There is nothing wrong with transparency. Every senator in this room, every six months, gets a phone call from their local paper wondering why they have printed on so much paper, why they have taken a flight here for work or why they filled up at this petrol station. Transparency is good and we should ensure that it exists. (Time expired)

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution on this matter of public importance debate. To put it mildly, Senator Hanson has jumped the gun. While there are not any One Nation senators on the Environment and Communications Committee, I would hope that if Senator Hanson is calling for the board of Australia Post to be sacked, she might have taken a slight interest in the opportunity to ask questions of the chair of the board at estimates in less than two weeks time. Typically, the Australia Post chair does not attend estimates, but last week I requested that the committee expand the requested witnesses from Australia Post to include the chair of the board, Mr Jon Stanhope. Mr Stanhope is also the chair of the remuneration committee and is conducting a review into the processes that led to how the managing director's salary was set. I thank my colleagues on the committee for agreeing to invite Mr Stanhope, and I look forward to pressing him and his colleagues on their decision-making processes for setting executive remuneration at Australia Post.

In this place we pride ourselves on hard interrogations of public and private officials on matters of interest to the Australian public. As senators, we have immense power to ask questions and command answers. But when faced with a problem such as excessive remuneration, simply throwing her hands in the air and declaring that it is all too hard and that a whole board should be thrown out might get a Senator Hanson story in the press, and the senator's outrage might appeal to her base, but calling for a specific board to be sacked because you are unhappy with the excessive salary package of one managing director demonstrates a lack of imagination and that there is likely something deeper at play.

Since coming to this place I have maintained a strong interest in the management of Australia Post, and in particular how decisions of management affect workers, licensees, contractors and rural and regional communities across Australia. Along with a number of colleagues from across the political spectrum—I notice in the chamber Senator Anne Ruston, who was the chair of the committee when we did the Australia Post investigation into LPOs sometime ago and had an inquiry that went for quite a long time—we have pursued Australia Post about their declining mail volumes, their service delivery, difficulties with the increasing parcel volume and management's treatment of contractors, licensees and workers. The managing director, Mr Fahour, and I have had numerous heated exchanges over the past few years. On many occasions I have been bitterly disappointed in the quality of Mr Fahour's answers. The issue before us today has come to air because of questions asked by myself and Senator Dastyari in estimates in October last year. We asked why the annual report from last year did not include a breakdown of senior executive salaries, as the report only listed an aggregate of $12 million, which is an increase of $4 million on the aggregate from the year earlier. At the hearing, Mr Fahour argued that Australia Post followed a direction under the Public Governance, Performance and Accountability Act:

We followed the instructions issued to all GBEs two years earlier about how their annual report was to be presented and we are complying 100 per cent with the instructions given to us.

As Senator Paterson said in his contribution, Senator Dastyari and I insisted that Australia Post take on notice the breakdown of senior executive salaries. Australia Post responded to the committee in December last year, with the corporate secretary requesting that the evidence be treated as commercial in confidence and not disclosed to the public. In the letter, the short-term employee benefits and post-employment benefits for Mr Fahour were disclosed. However, the corporate secretary claimed that information on executive salaries contains personal and sensitive information and the disclosure of such information in the public domain might be prejudicial against those individuals to whom the information relates. I felt that this was an extremely weak excuse. Corporations in Australia must disclose their executive remuneration and must provide a breakdown of base pay, bonuses and other payments. And no mention of the section of the Public Governance, Performance and Accountability Act, referred to by Mr Fahour at estimates, was made in this letter.

The committee wrote back to Australia Post in January noting that Post did not make a claim of public interest immunity to withhold information from the committee. Rather, Post provided some information, namely Mr Fahour's salary, and requested that it not be published. The committee noted that Australia Post volunteered this information and that the committee believes it is appropriate for Mr Fahour's salary and the salary of all senior executive service at Australia Post be disclosed to the Australian people. The committee gave Australia Post an opportunity to respond before we were to make the documents public. The response did not convince any of us to not disclose the information provided. The second letter from Post cited legislative requirements, public interest immunity claims and commercial confidentiality as reasons that the salary of Mr Fahour and the Australia Post executives not be made public.

I note that the requirements under the PGPA Act changed in July 2015 on the direction of the Minister for Finance, Senator Cormann. In seeking to streamline reporting and reduce red tape, the minister changed the requirement from individual reporting to aggregated reporting of executive pay. Commonwealth entities could volunteer more information but were now able to be less transparent than corporations regulated under the Corporations Act. Given the outrage from government senators and members, including the Prime Minister, about Australia Post's lack of transparency and the excessive salary of the managing director, it would be interesting to examine in coming months if Minister Cormann seeks to reverse his 2015 instruction or if the outrage from the government is as confected as it seems.

As I mentioned earlier, the letters from Australia Post also made claims of public interest immunity based on the information being personal and the disclosure of this information may be prejudicial. Notwithstanding this ridiculous motion by Senator Hanson, the media attention that I have seen flowing from the disclosure of Mr Fahour's salary has been based on comparisons with comparable postal services across the world and other managing directors and CEOs in Australia. Further, Australia Post claimed that the public disclosure of executive remuneration would in no way be of any relevance to the community because no public money or resources are used to fund the company. I recall reading this part of the letter, and it really took my breath away. It was such a ridiculous proposition—that the shareholders of a corporation, namely the Australia people, should not have access to the remuneration of executives simply because no public money or resources are used to fund the company. No public money or resources are used to fund many of the corporations regulated under the Corporations Act, but they disclose their executives' salaries.

The final argument made by Australia Post against transparency of this information was on the grounds of commercial confidentiality. Post argued that, as over 70 per cent of its business operates in a commercial environment, disclosing the salaries and other payments to executives may 'harm the commercial interests of Australia Post'. This letter then goes on to claim that senior executive contracts include a confidentiality clause and that disclosing remuneration will be in breach of the terms of their employment. Come on! These arguments are not backed up with any evidence that the commercial interests of Australia Post would be impacted—it is just an assertion—and are in complete ignorance of Senate committee rules and orders.

I congratulate my colleagues on the committee and the committee secretariat for working together on this matter and for responding firmly on the grounds of the public interest in the disclosure. I really hope that Mr Fahour, Mr Stanhope and their team have learnt from this experience and that, in a fortnight's time at estimates, they come prepared to work with senators to explain the decision-making process for setting the remuneration packages of senior executives and to provide information that improves public confidence in Australia Post. While the business is changing and there is incredible strain on the traditional mail service which requires hard decisions to be made, this must not be done in secret.

Senators may recall a long Senate inquiry—as I spoke about earlier—into Australia Post and its relationship with licensees. It ran for over a year and reported in 2014. The Senate inquiry uncovered a range of issues with the management of Australia Post, and it is pleasing to note that Australia Post has acted on a number of recommendations of that inquiry to better support licensees and staff. But those licensees are still struggling. The average postal worker earns enough to get by but also faces a lot of uncertainty in their working future as the business restructures and seeks new opportunities.

I believe that it is vital that the Licensed Post Offices, who are the heart of so many rural communities, the contractors who deliver our parcels, the permanent staff in Post-owned stores and those who manage the complex logistics of sorting and delivering mail and parcels, and the Australian public are engaged in a respectful and honest fashion by Australia Post management. I do not support this motion from Senator Hanson. I look forward to questioning Mr Fahour and Mr Stanhope. (Time expired)

Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Ditto to what Senator Urquhart said in terms of both the substance and the sentiment of her contribution. I find myself agreeing with what she said.

Most Australians—and many in this place—are disturbed by the secrecy surrounding the managing director of Australia Post's salary package, which is in the order $5.6 million. Only after probing by Senators Urquhart and Dastyari, and with Senator Paterson's assistance, has this come to light. To pub test this number it is worth noting that our Prime Minister earns about $520,000 a year—one-tenth of the remuneration of the Australia Post CEO. To compare apples and apples, the US Postmaster General earns about $540,000—one-tenth of the remuneration. A further point worth raising is that the managing director is on an indefinite contract at the pleasure of the board. It has been revealed that he can be terminated on 12 months notice with payment in lieu—a $4.3 million lump sum payment. It is a good gig if you can get it.

I am very concerned about the secrecy surrounding this and the need for transparency. So how did we get to this point? Let us try to unravel this. In turn, is there a way forward to reform the current system? I believe there is. Australia Post is a government business enterprise under the Public Governance, Performance and Accountability Act. The principal executive officers of GBEs have their salaries set by the Remuneration Tribunal. For example, the managing director of AEC is on a salary from $469,000. The head of the Defence Housing Australia is on a band salary of between $237,000 and $470,000. The Remuneration Tribunal Act defines the head of Australia Post as a principal executive officer, but it turns out that the remuneration of the Managing Director of Australia Post is not set by the tribunal but rather by the board of Australia Post. This comes about because section 86 of the Australian Postal Corporation Act entrusts the board, not the tribunal, with the setting of the managing director's salary.

I direct no ill will at Mr Fahour. To his credit, he has listened to the crisis facing licensed post offices and there have been improvements. Much more needs to be done but, as the saying goes, 'You don't get what you deserve; you get what you negotiated.' He seems to have negotiated well; perhaps the board did not negotiate so well. What we need to do here is not only examine this matter carefully and forensically at estimates but also repeal the relevant sections of the Australian Postal Corporation Act to place the remuneration arrangements of this government business enterprise back into the hands of the Remuneration Tribunal. Transparency demands this reform and indeed the pub test demands this reform. We need the transparency and we need the rigour of the Remuneration Tribunal being involved in this. It is an anomaly that this is simply left up to the board of Australia Post. The sooner we reform this, the better, and it is something that I believe the people of Australia demand.

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I rise to support the matter of public importance. I agree, and I am sure the overwhelming majority of Tasmanians believe, that due to the excessive remuneration paid to the CEO and directors there is a need to remove and replace the board of Australia Post. The Prime Minister earns $522,000 a year; the Managing Director of Australia Post, Mr Fahour, earns $5.6 million a year. In seven years, Mr Fahour's salary has doubled, in an organisation which the Australian government has significant influence over because it is a government business enterprise—and a government business enterprise has shareholder ministers on its board.

Last year Mr Fahour opted to forgo his $2 million bonus after public controversy. He donated that money to an Islamic charity run by his brother—I believe it is called the Islamic Museum of Australia, in Melbourne. A respected ABC political commentator, after research and crunching the numbers, says:

… chief executive of Australia Post is not just the highest paid man in the Commonwealth's service, he appears to be the highest paid postal executive on the planet. In fact, Australia Post's old annual reports suggest the top five executives all make more than $1 million a year.

And on Mr Fahour's watch postage stamps have climbed from around 50c to $1—they have doubled. While I hold the board of directors responsible, I also say that both Labor and the Liberals share the responsibility for the unreasonable spending of taxpayers' money. I would like confirmation that no political party or candidate has benefited from the generosity that subsequent governments have lavished on Mr Fahour and his lucky family. As a principle, I do not believe any person or organisation who receives money from or does any form of business with the government should be allowed to make political donations. Preventing such donations would go a long way to cleaning up corruption in Australian politics.

Mr Fahour's salary and bonus is an insult to every struggling Tasmanian. It is an insult to the brave and hard-working Australian Federal Police officers who may have to endure a cut in their danger money. Average AFP families whose breadwinner watches terrorists and organised criminals will, under this government's plans, lose $30,000 a year. The reduction in AFP resources has already been felt in Tasmania. While Mr Fahour became the world's best paid postal executive, this government removed 27 Federal Police officers from the Hobart airport after a $22 million budget cut, announced in the May 2014 federal budget. Hobart is now the only capital city airport in Australia without a permanent AFP presence. This government really needs to get its priorities right.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

Order! The discussion is concluded.