Subjects: One.Tel; obligations of company directors; superannuation.
E&OE................................
MUNRO:
Mr Howard, thanks for your time. Just how committed are you to ensuring that company directors have a mutual and moral obligation to guarantee their workers' entitlements?
PRIME MINISTER:
Well you can't legislate a moral obligation. You can only exhort people to discharge it. But what we will do for future situations is to change the law so that when bonuses of the type that were made available in the One.Tel situation, when that occurs in the future and a company goes into liquidation or receivership or whatever then there's an automatic refund or repayment obligation in relation to those bonuses. I think the thing that has really angered people in this situation are those bonuses. They were remarked upon as being extraordinary at the time. They appear to be based on the capitalisation of the company rather than the performance of the company.
MUNRO:
But just bonuses? What about severance pay?
PRIME MINISTER:
Well I think bonuses, and we haven't completed the details of the legislation, but I think bonuses are the things that really anger people particularly. I mean severance pay is often based more directly on the performance of the company after somebody's been with it for a period of time. But we're not trying to attack ordinary director's fees or proper remuneration. I mean you've got to be very careful in a situation like this that you act decisively to stop abuse but you don't make it too difficult for the honest director. I mean most people who run companies are honest, straight-forward, hard working entrepreneurial people and we want to encourage and keep those people in the game and on the field. But where you get a situation where..I mean these bonuses were $7 million a piece.
MUNRO:
And you are calling on Jodee Rich and Brad Keeling to pay it back?
PRIME MINISTER:
Yes I am. And there is some indication from one of them as we speak that that may occur and I hope that indication is correct.
MUNRO:
Are you able to say which one?
PRIME MINISTER:
Well I've just heard on a news report that one of them is contemplating a repayment. Now if that is the case then that is good news. I don't know any more detail than that. And Peter Costello on behalf of the Government called as early as last Friday for these bonuses to be repaid. I think the commonsense view is that you can hardly justify bonuses when the company got into difficulty so soon after the bonuses were paid. I mean it really does defy..it doesn't pass the pub test, if I can put it that way, that somebody can be entitled to a bonus of that size and within a few months the company goes apparently belly up.
MUNRO:
What about other One.Tel directors like Rodney Adler, Lachlan Murdoch, James Packer. Should they be made to contribute as well?
PRIME MINISTER:
Well they haven't been paid bonuses. I mean I would like to see one way or another I want to see the workers get their entitlements. They are entitled to their entitlements and I want to see them get it. And we have said that we won't allow them to be left swinging. If the assets of the company, if there is a liquidation or receivership are not sufficient to cover their entitlement, and if the founder directors, that's Rich and Keeling, don't repay their money and therefore the company's not able to meet the workers' entitlements well we'll provide a safety net up to 50% under our scheme and we'd look to the New South Wales government and the Victorian government to kick in the rest.
But I mean look, everybody who's involved in this has some responsibility. But the real responsibility is most heavily borne and the heaviest moral responsibility is borne by Mr Rich and Mr Keeling. And I would just appeal to them from the point of view of their own standing in the business community, both of them are relatively young men and we all value our reputations, all of us, they are not paupers and I think they should consider their positions and consider the position of the people, the 1400 men and women, who are employed by the company.
I mean we've got to have a balance in this society. We've got to have a society that allows people to make money if you work hard. But we've also got to have a situation where you have a, you know, an apparently disproportionate enrichment, then the person who gets it when the company that enriched him gets into trouble so quickly he ought to be under some obligation to pay it back.
MUNRO:
So if it's good enough for Messrs Rich and Keeling should the directors of the failed HIH be also looked at?
PRIME MINISTER:
Well I don't know whether you have the same bonus arrangements. But you know, I mean I'll leave the book open on that.
MUNRO:
What about their super?
PRIME MINISTER:
Well you've got to try and..I mean I'd like to know all the details of that. Look Mike I'm not going to start amending the Corporations Law on your program. I think that's very bad policy making on the run. But we clearly have a situation where some bonuses that many people at the time wondered about. They are disproportionately large by any measure. The company got into very speedy difficulty and we think they ought to be repaid and moreover we believe that the law should be amended to require repayment of bonuses of that kind in like circumstances in the future and we intend to do that.
MUNRO:
Mr Howard we're almost out of time. But just very briefly on the politician's superannuation. You're easing on the policy of politicians receiving their super after 55?
PRIME MINISTER:
Well I think there is a strong case for saying that the same should apply to us as applies to other people. There are some situations to be looked at where people go out fairly quickly and have difficulty gaining re-employment. But in principle I can see some very strong arguments in favour of bringing it up to 55. But I want to talk to my colleagues about it.
MUNRO:
What about the anomalies involved in the contributions?
PRIME MINISTER:
Well you've got to weigh that against..I have a somewhat different view on that. You've got to weight that against the fact that...look the Federal Treasurer of this country gets paid less than $200,000 and he's meant to manage an economy in which the managing directors of companies as you well know are paid sometimes ten even twenty times that figure. I think you've got to have a bit of a balance and we do want to attract people of calibre into Parliament. So I'm not so, you know, I'm rather more resistant to change in that area than I am in relation to the age. I think it does anger people that somebody can go out at 35 and immediately get their super whereas somebody else who goes out at 35 can't access it until they reach 55. And on top of that Members of Parliament's contributions are about 11% when they start which is much higher. I mean a lot of people who get super they don't make any contribution to it at all where as from the very beginning we make a contribution of 11% after tax.
MUNRO:
There's certainly a lot of anger out there about it though isn't there?
PRIME MINISTER:
Well particularly about the age thing and I think people have got a point on that. And we are examining that and I would imagine that commonsense will prevail.
MUNRO:
All right. Mr Prime Minister, thank you very much for your time.
PRIME MINISTER:
Thank you.
[ends]