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

The Communications Legislation Amendment (Executive Remuneration) Bill 2017 would formally give the Remuneration Tribunal the ability to set the remunerations of the CEOs of Australia Post and NBN Co. This is in the wake of revelations that the remuneration of Australia Post's previous chief executive officer was $5.6 million last year. This has quite rightly been widely criticised and was not in line with community expectations for an entity that is ultimately supported by taxpayers. Australia Post did not report the CEO's salary and, rightly, was roundly criticised for this. Indeed, it was only after a Senate committee denied their request to keep the figure private was it actually finally revealed. The CEO affected has since stood down from his position at Australia Post.

The government then moved to designate the CEO of Australia Post as a principal executive officer and Australia Post as an employing body under the Remuneration Tribunal in response to the outcry over the former CEO's salary. The government has stated that this has had the effect of ensuring the Remuneration Tribunal has appropriate oversight of the CEO's pay. We understand that the tribunal did oversee the setting of the remuneration package for the incoming chief executive officer, who is on a considerably lower salary package.

Labor and the government undertook significant reforms to the Commonwealth's financial management arrangements. This has established a framework necessary for a modern public sector. These reforms were based on a number of key principles: that the government should operate as a coherent whole; that a common set of duty should apply to all public resources handled by Commonwealth entities; and that these should be managed prudently and efficiently. The performance of the public sector is more than financial, and engaging with risk is a necessary step in improving performance. The PGPA Act provided more flexible arrangements for entities and relied on the management of a number of subordinate rules and regulations where officials were expected to be held to a high standard of accountability. And yet we have recently seen, through the Australia Post example and other agencies, decisions not to disclose the remuneration of their senior executives.

As we have learnt now, the Abbott and Turnbull governments did not ensure that Commonwealth entities had sufficient checks and balances on executive remuneration. This led to Australia Post's not revealing the chief executive officer's $5.6 million remuneration package, which was clearly out of step with community expectations. The failure by Australia Post management and board to reveal detailed remuneration information as part of its annual report was enabled by changes to reporting rules which had been made by the Minister for Finance, Senator Cormann. This demonstrates very much the gaps in the Commonwealth's financial reporting framework that have opened up under this government, and this bill does not actually fix that problem.

We on this side are of the view that greater transparency and scrutiny through Senate estimates will assist to ensure boards and management are held to account for the setting of remuneration, and that it is within the community's expectations, as was shown through the Australia Post example. The Auditor-General considered that there would be benefit in making the aggregate level of transparency for key management remuneration in the public sector consistent with that required for listed entities, and the government has also requested a number of Commonwealth entities revert to the previous regime of remuneration reporting. We welcome the release of those reports under the Minister for Finance's request. However, we believe the government should act to ensure that these are formally required of all Commonwealth entities, and not just at the request of the minister. The government is yet to act on this.

When everyone else is tightening their belt and experiencing record low wage growth, the government was happy for CEOs' salaries to be hidden, as in Australia Post's example. But in comparison to the poor choice by Australia Post, NBN Co chose to disclose much more detailed information. Labor is keen to consider how to formalise the requirements for executive remuneration to enhance transparency, thereby enhancing trust from the community and hold boards and secretaries to account for their remuneration arrangements.