Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by ministers to questions without notice asked today.

What a proud day for the government! What a day for Senator Coonan! We have had the Telstra prospectus debacle all day. All weekend we were told: ‘10 o’clock on Monday, we will have the T3 prospectus, after we’ve finished bullying and intimidating the Telstra board to give in so that they will have a whitewash in the prospectus.’ What a proud day it must be! The government’s nomination of Mr Cousins is just the latest, as I said, in a series of government acts of bullying and intimidation aimed at the Telstra board and its management. We have seen the government demanding, cajoling and threatening in order to get the Telstra board to agree to a two-year dividend forecast—something that both Standard and Poor’s and Moody’s said was unsustainable. Can you imagine if a Labor government had tried to bully a board into delivering an unsustainable dividend. The coalition—the great defenders of the free market—would be going out of their tree. But it did not just stop there.

We then saw John Howard try to demand, first, the sacking of Telstra executives. And then, when the government were not able to achieve the sackings, they demanded they be gagged. It was not good enough that they tried to sack them; they then tried to gag them. Then we had this latest debacle: they have leant on the board for the last week demanding that they have a whitewash in the prospectus. Do not worry about the corporate law in this country. Do not worry that a prospectus is a serious document that must outline the board’s concerns about risks that it faces. The Prime Minister, John Howard, wanted to gag the board’s statements. The government said, ‘You will not say what you think about the nomination of Mr Cousins. You will not say what you think about the government’s policies and, just in case you do not get the message, understand that we will vote against your existing directors.’ What an act of political thuggery—standing the board up and saying, ‘Either you deliver what we want, you go out there and mislead the Australian public in this prospectus, or we will vote your directors out of a job.’

To make matters worse, the government has engaged in this campaign at the same time as trying to convince the Australian public to buy into Telstra. This is economic incompetence writ large. The government is cutting off its nose to spite its face. The government is letting its personal vindictiveness undermine the Telstra sale. This is gross economic incompetence.

We have seen the attack dogs on the other side—Senator Ronaldson out there in estimates and a whole list of government members and senators—attacking the Telstra management because it has dared to tell the truth about the state of the Telstra network. It has opened the door and said, ‘The emperor has no clothes. The Prime Minister had no clothes when he claimed just 12 months ago that everything was up to scratch.’ Do we all remember that? John Howard has walked the country for the last 10 years saying, ‘Telstra services are up to scratch.’ But Mr Trujillo and the Telstra board have said, ‘That’s not true.’

The minister has yet again shown sheer vindictiveness and incompetence. In question time the minister stated that Mr Cousins would have a lot to offer during the Telstra float. There is only one problem. That statement, of course, completely ignores the fact that Mr Cousins will not be appointed to the Telstra board until after the AGM on 14 November 2006—five days after the float closes. So we see this minister yet again demonstrating her inability to master her own portfolio. If the government’s cunning plan was to install Mr Cousins on the Telstra board to assist with the float, it needs a new desk calendar—or Senator Coonan needs to get a new job.

Let us be clear. Mr Cousins is a colourful character. Let me read to you a comment from Mr Grahame Lynch from Communications Day, a journalist in this area. (Time expired)

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

One can only wonder where Senator Conroy is coming from in making the criticisms he does of the government’s actions in seeking the appointment of Mr Cousins. The government, Senator Conroy, as I might remind you, is the majority shareholder and has the interests of the people of Australia to care for. And that is why the government has every right to want to see the best possible people on the board of this corporation. Telstra is, after all, one of this country’s very biggest businesses. It has a turnover running into billions of dollars, it has literally thousands and thousands of employees and its services reach out across this country to every citizen of Australia.

So, surely, as a majority shareholder, with those sorts of issues around this company, the government should insist that the directors be the very best people available. In fact, they should be people with an understanding of the telecommunications industry, a broad interest in and experience of business in general, and also a great understanding of the public interest. The government has a responsibility, as I said, to ensure that the best qualified directors are appointed to this company because it has such an important role to play in our society.

So let us have a look at Mr Cousins. Mr Cousins has exemplary qualifications to be a director of Telstra. He not only has a very strong business background, with considerable experience in marketing, advertising and telecommunications, he is also a person who has a great sense of responsibility to the Australian community. For 20 years Mr Cousins was a senior executive with what was Australia’s most powerful advertising agency, George Patterson Pty Ltd.

He also has a great deal of experience in the communications field. He has been a director of PBL, Publishing and Broadcasting Limited, one of Australia’s greatest communications companies and media networks; and he has also been a director of the Seven Network, one of our three great free-to-air television services. In addition, Mr Cousins is currently a director of the Insurance Australia Group and the Cure Cancer Australia Foundation. So he is a man with broad general experience in business, broad experience in telecommunications and broad experience in areas of community need such as dealing with cancer.

Like all other directors, Mr Cousins will have fiduciary duties to act in the interests of all shareholders. And that is what he will do, because he has plenty of experience of the legal requirements of directors of public companies. Mr Cousins will, I am sure, make a valuable, independent contribution to the board and add to its depth through his extensive experience of Australian telecommunications and corporate affairs.

Surely to goodness there is no argument that shareholders appoint board members or that the Australian government is the major shareholder in Telstra. There is nothing wrong with a majority shareholder nominating a director and, in fact, it is an accepted corporate governance practice in Australia and overseas. Indeed, Telstra has itself appointed various people to the board.

The claim by the ALP that this is an attempt by the government to stack the board is absolute nonsense. What would the ALP do, I wonder; appoint some union hack, just as they appointed people to run Centenary House? What we need is people of good calibre and broad experience, and that is what the government will be giving to Telstra with the appointment of Mr Cousins to the board.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

What we have seen today and over the previous week in relation to Telstra is the Howard government yet again being willing to ride roughshod over both good practice and Corporations Law requirements to get the political outcome it wants. We have seen this time and time again from this government. Previously we have seen the government leaning on the board to provide dividend payments at unsustainable levels. We have heard the government previously gag Telstra executives from criticising the government’s regulatory policy. Perhaps none of these things, though, are as important as what the government has sought to do in relation to the issuing of the prospectus for T3.

We have laws in this country regarding the disclosure of risk, particularly in the context of the issuing of prospectuses when shares are being offered to the market for the first time. It is incumbent upon directors of a company to give a full and frank analysis of their opinion as to the risks a company faces. Through newspaper reports and through the responses given by Senator Coonan today, we have seen that the government was happy to have those requirements watered down when it came to the board’s view as to the risks associated with the Cousins appointment.

Regardless of one’s view about the Cousins appointment—and Senator Conroy and the Labor Party have made our view about that appointment clear—the fact is that the board of directors of Telstra was required to properly disclose to the market what it regarded as the risks associated with that appointment. What we have seen through the newspapers, and what we can infer from the delay and the involvement of the Australian Securities and Investment Commission, is that the government wanted to water down the disclosure of risks. It wanted to water it down because it wants its political outcome to be paramount—not compliance with both the detail of the law and the spirit of the law.

The government is happy to put pressure on the Telstra board to reduce what the Telstra board says to the market about the risks associated with the Cousins appointment. As a result—and Senator Coonan did not deny this when it was put to her—the Australian Securities and Investment Commission had to come in and presumably negotiate some sort of resolution or at least provide advice as to what was required, under the government’s own law, to be disclosed to the market. Now we have a rather odd disclosure in the prospectus for T3 where the government is saying one thing and the Telstra board directors are saying another.

I want to make one particular point about this. It is very interesting that the government, in relation to this clearly politicised appointment, is happy to ride roughshod over its expectations for the behaviour of other companies that are listed or proposing to be listed on the Stock Exchange or involved in the issuing of prospectuses. This is the government’s law and it is the law of the country—the Corporations Act and what must be disclosed.

In addition, the government seeks to ensure that companies comply with the Australian Stock Exchange corporate governance rules. What have we seen? We have seen the government telling the private sector and other companies to do one thing but seeking to do something else to get a political outcome in the context of the Telstra board and the T3 sale. The government is telling other companies, ‘You have to go over all these high jumps. You have to meet all these standards. We expect this of you.’ But when it comes to its own political interests in the T3 sale, it is happy to try to push a lesser level of compliance.

We know from the prospectus itself that the Telstra board has said quite clearly, and I will read from the prospectus, which was issued today two hours late:

The Telstra Board did not seek Mr Cousins’ nomination and did not have the opportunity to adequately assess Mr Cousins’ candidacy in accordance with its governance processes, which include assessing a proposed director having regard to the independence requirements of the Board’s Charter and the ASX Principles of Good Corporate Governance.

In other words, the government is asking Telstra not to observe the ASX good corporate governance principles and guidelines, which it expects all other listed companies to observe.

In addition, we know that we have had ASIC involved in consultation in relation to the prospectus. Senator Coonan has not come clean as to why they were involved. I say to the government: why don’t you come clean and tell us what you really wanted in there and what ASIC told you you had to put in there in order to comply with the law? I will tell you what: this smells pretty bad. We have the government wanting one line in the prospectus. We have ASIC being involved. We know that. That has been indicated and confirmed. Tell us what you didn’t want in there.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

If that is the best the Australian Labor Party can do in relation to this issue, then clearly the issue is dead before it even starts. With the greatest respect to Senator Wong, I have never heard such patent nonsense in all my life. Is Senator Wong seriously suggesting—

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

You say that every time you get up—

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

If you disagree with me, you clearly were not listening to what I was saying. Senator Wong has clearly plucked the appointment of Mr Cousins out of the air and given to him a corporate responsibility that I do not think anyone else in this country would have ever shared. Are Senator Wong and Senator Conroy really suggesting that Mr Cousins is going to have an impact on future earnings in his own right—an impact on future dividends in his own right? Is he going to effectively be running this company to the extent that it is such an issue?

The bottom line with this is that Mr Cousins will bring to this board the sort of qualifications that the Australian Labor Party, with its jobs for mates, most certainly did not ever bring. Let me very briefly go through the qualifications of Mr Cousins. The community will make up its own mind about Mr Cousins—and not by listening to the Australian Labor Party or some in Telstra management. When we look at what this man has done and whether he is likely to bring some skills to the job, I think that emphatically the Australian people will say yes.

Mr Cousins has very strong experience in marketing, advertising and telecommunications. I would have thought they were three great qualities in someone taking on the responsibility of a Telstra board member. For 20 years, Mr Cousins was a senior executive with Australia’s most powerful advertising agency, George Patterson. Surely, for a company that is going through what Telstra is going through at the moment, marketing and advertising skills and the ability to convince institutional and private investors—retail investors—of the bona fides of this company and the fact that it does have a plan for the future would be two of the qualities needed.

Surely some telecommunications skills would also be required. Mr Cousins has been a director of Publishing and Broadcasting Ltd and the Seven Network. Indeed, he has 26 years experience as a company director. The Telstra board has made its views known about Mr Cousins. The government has made its views known as well. The government is a majority shareholder. This is not some stack of the Telstra board. This is the government, as a shareholder with entitlement to appoint board members, appointing someone with the requisite skills to drive this company forward. Mr Cousins has the skills to drive the company forward. If you were to listen to the Australian Labor Party, you would think that the government had plucked people out of the air to drive the Telstra board for the next 10 years. We could have appointed five directors had we wanted to do so. We made the decision to appoint one—one with the requisite skills to do the job.

If I had 10 minutes I would happily go through the appointments by the Australian Labor Party at a state and federal level over the last three decades whereby the appointees had absolutely no skills for the boards and companies to which they were appointed. The bottom line is that Mr Cousins has the sorts of skills that Telstra requires. He has the sorts of skills that mum-and-dad investors in Telstra will be looking for for the future. (Time expired)

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

If this matter were not so serious, one would smile at the contribution from Senator Ronaldson, who would have us believe that the controversy about Mr Cousins is all the Labor Party’s doing and that Mr Cousins’s CV is impressive. I think Senator Ronaldson referred to Mr Cousins as having a ‘strong background’ in telecommunications. It is so strong that the public record shows that when Mr Cousins was the CEO of Optus Vision the company lost $4 billion. That is how strong a background Mr Cousins has. But it is not just his so-called ‘strong background’ of a $4 billion loss in telecommunications when he was the CEO of Optus that is worth noting—he has worked for the Prime Minister in the Prime Minister’s office for some 10 years as a political adviser.

It is not only the Labor Party that has kicked up a fuss about the quality, or lack of quality, of this appointment and its timing; other commentators have done so. I do not know what the Senate has been reading over the last week or so but, for example, Mr Stewart of the Australian Shareholders Association—hardly a front organisation for the Australian Labor Party—said:

Cousins’ nomination virtually guarantees board instability.

That is from the CEO of the Australian Shareholders Association. Mr Ross Barker, the Managing Director of the Australian Foundation Investment Company—again, hardly a Labor Party front—said:

Ultimately, from an investor’s point of view we want to know that the board is going to function after the sell-down.

Any number of commentators have been critical of this appointment—commentators who have nothing to do with the Australian Labor Party. This proposed appointment, on the threshold of the government selling its majority down from 51 per cent to whatever the figure will be, has created enormous uncertainty around the future of Telstra.

What Telstra does need—and certainly what the average punters, the mum-and-dad shareholders, and the future shareholders need—is some certainty about the future of Telstra. If they do not get that certainty, it will affect the price of the shares when the shares are sold. The ongoing uncertainty around Telstra, which is the result of a lot of incompetent decisions made by this incompetent government, has seen shareholder value decline dramatically. Go and ask the more than one and a half million Australians who purchased T2 shares what has happened to the capital value of their shares in Telstra. We have seen a range of bad decisions by this government over the last 10 years around Telstra, not just with regard to its privatisation but also with regard to the regulatory regime. The appointment of Mr Cousins is just the latest in a long debacle of incompetent decision making by the minister in this place, Senator Coonan, and by Senator Minchin in terms of the privatisation process.

I have a copy here of the prospectus released today by the Telstra board, as is required by law. In that prospectus is an assessment by Telstra of Mr Cousins—it is not the Labor Party’s assessment or the assessment of the independent commentators I have referred to. Under ‘Risk Assessment’ it says:

Telstra operates in a highly regulated environment, and the Commonwealth and its agencies are the key regulators. While Telstra acknowledges that Mr Cousins has served as a public company director, Telstra believes there is a risk if Mr Cousins cannot be considered an independent director that this could prove disruptive to the smooth and effective functioning of the board. Were this to occur, this could also affect Telstra’s ability to attract and retain qualified directors.

That is in the prospectus. That is the view of the Telstra board about Mr Cousins, the timing of the appointment and the quality of Mr Cousins as an appointee. Mr Cousins is a political hack. He lost $4 billion at Optus Vision. (Time expired)

Question agreed to.