Alan Eggleston (WA, Liberal Party) Share this | Hansard source

The Australian Broadcasting Corporation Amendment Bill 2006 has the effect of abolishing the position of staff-elected director on the ABC board. The Senate Environment, Communications, Information Technology and the Arts Legislation Committee has held an inquiry into the provisions of the bill in the last few weeks. The committee received submissions from 59 organisations and individuals and held a public hearing here in Canberra.

Abolishing the position of staff-elected director is consistent with the findings of Uhrig’s review of the corporate governance of statutory authorities and office holders. The Uhrig review stated that it is opposed to representational appointments on boards because they:

... can fail to produce independent and objective views. There is the potential for these appointments to be primarily concerned with the interests of those they represent, rather than the success of the entity they are responsible for governing.

The review goes on to observe that the preferred position is not to create circumstances where a conflict of interest might arise. Members of the Senate will therefore, I am sure, understand that the position of staff-elected director does not accord with modern principles of corporate governance in that there is a potential conflict between the duties of the staff-elected director, under the Commonwealth Authorities and Companies Act 1997, to act in good faith in the best interests of the ABC and the appointment of that director as a result of a process of election by the staff.

There is, without any doubt, an inherent risk that a staff-elected director will be expected by the constituents who elect him or her—in this case, the staff of the ABC—to place their interests ahead of the overall interests of the Australian Broadcasting Corporation. This inherent conflict of interest was noted by the Chairman of the ABC, Mr Donald McDonald, when he stated:

Inevitably there has been a tension between the expectations placed by others on their role—

meaning the staff director—

and their established duties as directors of a corporation.

The committee received evidence that staff sometimes have expectations of the staff-elected director which do not accord with his or her role as the director of the corporation. The incumbent staff-elected director, Ms Ramona Koval, for example, refused to sign the ABC board protocol outlining the governance arrangements of the board. This protocol is viewed as important to the effective operation of the board, especially in the light of alleged leaks of confidential board information. In particular, it raises concerns about the ability of staff-elected directors to act in the best interests of the ABC and, in doing so, to act in a manner that places the interests of the ABC above those of the staff who elected them.

The committee received submissions expressing concern that the absence of a staff-elected director will compromise the independence and integrity of the ABC, but the arguments put were not supported by any compelling evidence to this effect. In fact, all members of the board will still be required to act in accordance with the provisions of the Commonwealth Authorities and Companies Act 1997 and of the Australian Broadcasting Corporation Act 1983, which charge the board and its members with the responsibility of maintaining the independence and integrity of the corporation. Moreover, in the absence of a staff-elected director, there will still be a member of the board not appointed by the government—this being the managing director of the ABC, who is a full member of the board and is appointed by the board rather than by the government.

The committee also received evidence that the staff-elected director brings broadcasting expertise and experience to the board. The implication seemed to be that that was the only means by which the board could be provided with information about broadcasting in its various dimensions. But there are of course other methods of bringing such knowledge and information to the board, such as by bringing in experts or seeking the opinions of consultants where necessary. This view also ignores the broadcasting experience of other board members—including Mr John Gallagher QC and Mr Steven Skala on the current board—all of whom have quite substantial experience in the television and broadcasting industries.

The ABC chairman, Mr Donald McDonald, has acknowledged that the interests of the staff will not be neglected in the absence of a staff-elected director. In particular, the managing director is a full member of the ABC board and he acts as a conduit between staff, management and the board, so the interests, needs and requirements of the staff of the ABC have a process through the managing director by which their views can be expressed and brought to the attention of the board.

This bill, in restructuring the board of the ABC, will ensure that it operates within modern principles of corporate governance and accountability. The staff-elected director faces, in the government’s opinion, an inherent conflict of interest. As the Uhrig review has noted, it is better not to create situations in which conflicts of interest can arise. I commend this bill to the Senate.