Subjects: One.Tel; superannuation; gambling
E&OE................................
Ladies and Gentlemen I apologise for keeping you all waiting in the cold, I'm sorry about that. Mr Abbott and I are announcing that the Commonwealth will intervene in the Industrial Relations Commission hearing this afternoon. We won't be opposing the application by the union for the insertion of an award covering redundancy, we will however argue that if the Commission is minded to insert an award covering redundancy and I would expect that the commission would be so minded, then the amount should more accurately reflect the community standard which I understand to be in the order of about two weeks for each year of service rather than four.
I should also confirm and counsel for the Commonwealth will be confirming this afternoon that in the event of there being a liquidation, or receivership of One.Tel then the provisions of the Commonwealth safety net scheme for workers entitlements will be triggered and that applies to any unpaid entitlements in relation to holiday pay, or long service leave etc, and clearly any entitlement that may flow from the insertion of an award covering redundancy at the order of the Industrial Relations Commission this afternoon.
Our view very strongly as articulated by the Treasurer last Friday is that Mr Rich and Mr Keeling should pay back the $7 million bonuses they each received. It is overwhelmingly our preference that they pick up the tab for any workers entitlements and not the Australian taxpayer. We would like the book thrown at the One.Tel bosses rather than the One.Tel employees. We feel that very strongly.
We would argue also very strongly that in the event of our scheme being triggered by the receivership or the liquidation of One.Tel that the New South Wales Government should come to the party up to the tune of 50%, as is contemplated under our scheme. I understand Mr Carr is addressing the One.Tel workers, I hope he offers them a cheque as well as some words of comfort and advice because in the end the last thing that should happen is that the workers should be left swinging for their entitlements.
I hope the company doesn't go into liquidation, I hope a white knight or what ever other description you want to employ is found in order to keep the operation going. And I would very strongly counsel Mr Rich and Mr Keeling to think, if nothing else, of their future reputations not only in the city of Sydney but in the business community of Australia. They have a very strong moral obligation to pay that money back. I don't believe, using ordinary principles of common sense, I don't believe that those bonuses should have been paid in the first place. It's axiomatic that if a company got into difficulty so soon after the payment of those bonuses, it's axiomatic that they shouldn't have been paid, it would appear to me that they were paid on capitalisation and not paid on performance. And there is a very strong, indeed an overwhelming moral case for the money to be paid. But we don't want to see the workers swinging and we're prepared to step in and help them. We want the New South Wales Government in particular and other State Governments to join us. And if that happens, given the short period of time that One.Tel has been operating, I don't have all the figures at my disposal because they're not immediately available, if that were to happen, I would imagine that they would get just about all of their entitlements because the company has not been operating for very long.
There's one other matter I want to announce, is that in order to avoid this sort of thing happening in the future the Government is going to change the law to ensure that bonuses paid to senior management in these sorts of circumstances can be immediately recovered and applied. We think the law should be changed to stop this sort of thing happening in the future. We think specifically these sorts of bonuses should be immediately repayable in these sorts of circumstances. We need some time to draft that law and we'll make the details of that proposal available. But clearly there is a difference between directors fees and the like, payments made in the ordinary course of events and bonuses of this magnitude paid not on the basis of, I repeat, of performance, rather on the basis of capitalisation.
JOURNALIST:
(Inaudible)
PRIME MINISTER:
I beg your pardon?
JOURNALIST:
(Inaudible)
PRIME MINISTER:
Well I don't know that we changed our position. We've reflected on it, Mr Abbott might want to say something about that.
JOURNALIST:
You did think it wasn't appropriate this morning, didn't you, because it was Commonwealth contracts?
ABBOTT:
No, this morning I refused to commit the Government one way or another and today as the Prime Minister said we'll be intervening as the Prime Minister's indicated.
JOURNALIST:
Is there a case for retrospective legislation here?
PRIME MINISTER:
I've thought about that Laurie and I'm reluctant to do that, in fact I'm against doing it. I think it establishes a very unsound principle and we won't do it. I hope that the pressure that is now building and the fact that the Commonwealth is prepared to stand behind the workers adds to the pressure, will be such that Mr Rich and Mr Keeling will consider their position and write a cheque.
JOURNALIST:
Does this position show that common law contracts aren't a good idea for ordinary workers?
PRIME MINISTER:
I think that's not the main issue here. The main issue here is that bonuses of that magnitude should not have been paid, particularly on the basis of capitalisation and not on the basis of performance.
JOURNALIST:
. the entitlements.
PRIME MINISTER:
Yeah, but look. What is happening here, Paul, is that if these workers had been on AWA's part of the no disadvantage would have been a community standard in relation to redundancies. So really the problem is for the Labor Party because they're the ones that believe only in common law contracts. We believe in AWA's. In fact this demonstrates the validity of our policy not theirs.
JOURNALIST:
Mr Howard, in drafting this legislation what sort of time limit would you be thinking of in relation to the bonuses.
PRIME MINISTER:
Well under the present law in certain circumstances bonuses paid within a previous period of 4 years are refundable. Now.
JOURNALIST:
..current situation for that..?
PRIME MINISTER:
Well I mean, you have to, they have certain defences. One of them is that, you know, they had no grounds for believing the company was trading insolvently and that it was bona fide for value and all sorts of things. Now we're looking at, I mean one way of doing it is just to make that provision unconditional but that. hang-on, hang-on, I'm not saying we're doing that, that's one option. We're looking at various options and in the time available we haven't been able to settle on those various options. But, we do think the law should be changed to stop this sort of thing occurring in the future.
JOURNALIST:
Prime Minister you mentioned the principle of capitalisation versus performance in the triggering of these bonuses on the basis of share value alone. What's the Government's view of that principle and is there anything you can do about it?
PRIME MINISTER:
Well it was a reflection of the thought processes which led, inside the company, to the payment of the bonus. There are certain limits, see you're always caught, betwixt and between in a situation like this, you naturally rail against the payment of excessive bonuses, everybody does, on the other hand you don't want to shackle the decent entrepreneurs who are successful. And you've always got to balance the two, and there's always a danger here that you'll go too far in the wrong direction and I certainly don't want to do that.
JOURNALIST:
The Opposition's talking about a scheme, I can't recall exactly.
PRIME MINISTER:
What the one they had for 13 years.
JOURNALIST:
No no about, in terms of bonuses, about greater transparency of bonuses and when they're.
PRIME MINISTER:
We're not talking just about transparency, we're actually talking about the money having to be disgorged if certain things happen.
JOURNALIST:
And what happens if they put it in their wives names?
PRIME MINISTER:
Well, I mean, there are all sorts of combinations and permutations, but, I mean we want to tighten the law to make it as difficult as possible. I mean the thing that really sticks in everybody's craw in a situation like this is really the bonuses. People don't mind people making a profit, people don't mind people getting a decent return on their even speculative investments, but for these sorts of bonuses..there was criticism of these bonuses at the time.
JOURNALIST:
What about bonuses involved in take overs where directors are given rewards for merging a company. What if the take over doesn't preform as well as it should? Would they be covered?
PRIME MINISTER:
No, we're talking here about bonuses, the status of a previously paid bonus consequent upon the receivership or liquidation of a company, that's what we're talking about.
JOURNALIST:
Do you aim to have this legislation through by the time of the election?
PRIME MINISTER:
Well we're not going to waste any time getting it ready but precisely when it might get through I don't know but I would imagine that the Opposition would give it support.
JOURNALIST:
Mr Howard the Governments just gone through a major overhaul of corporate law reform. Why wasn't this sort of issue picked up in that reform process, because that did look at tightening up director's responsibilities. I mean isn't this [inaudible]?
PRIME MINISTER:
Well there were a lot of additional obligations placed on directors through those reforms. There are a lot more obligations on directors now then there used to be, but if you're saying why didn't we think of this five, ten years ago, I mean you can always say that. I mean you have changing circumstances. I think, I mean I do think this is in part a product of the sort of, fevered atmosphere generated by the huge investment and huge speculation surrounding information technology and if you bother to look over the records, you will find that about a year ago I expressed puzzlement as to the basis on which a lot of this investment was taking place and I thought it was somewhat insubstantial.
JOURNALIST?
Prime Minister the Treasurer made the point on Friday that there's a lot of, there were a lot of wealthy investors in One.Tel as well. If the money can't be recouped from the Jodie Rich and whoever the other guy is, should those wealthy investors have some responsibility to the workers?
PRIME MINISTER:
Well I just hope, I just hope that the money, sufficient money comes from somewhere to cover the entitlements of these workers.
JOURNALIST?
.Adler, Packer and Murdoch to help .?
PRIME MINISTER:
Well look I think everybody's who's been involved in this company has some moral obligation to see the workers helped out, that's my position. Everybody involved in it has a moral obligation to see that these people are helped out.
JOURNALIST?
Is the Government going to ..
PRIME MINISTER:
Everybody who's involved in it.
JOURNALIST?
Is there any sign that there is a white knight in the wings? Are you aware of that?
PRIME MINISTER:
I don't know, you would have to ask the liquidator that.
JOURNALIST?
Is the failure of One.Tel a failure of the deregulation of the communications market, in particular is it a comment on the power of Telstra?
PRIME MINISTER:
Ken Davidson, writing in The Age this morning had an interesting contribution to that. Do I think it's a failure of the.well look I think, I don't support that view. I think it is a product of a number of things, including I think an excessive lust for a quick buck on the part of some people. And I think that is to be condemned.
JOURNALIST?
Prime Minister how much damage do you think, how much damage do you think the HIH and the One.Tel collapse, or potential collapse will do to Australia's business standing internationally? How do you think it will be perceived in New York and London?
PRIME MINISTER:
Well I think you've got to see these things in perspective. Every capitalist society has corporate crashes. Every capitalist society gets into difficulty and I think if you look around the United States and you look around the United Kingdom you'll find those sorts of things occur there. We're not alone in that respect.
JOURNALIST?
When we were selling Sydney in particular though as a financial headquarters for the world, or for this region .
PRIME MINISTER:
I think you're being too negative and pessimistic in saying that. Look it is a, I mean HIH is a major collapse, the Government has taken action to protect people who shouldn't have been hurt by it. We are taking action here to look after the workers. Their entitlements will be guaranteed if the state Labor governments of New South Wales and Victoria come to the party. I mean this is a real opportunity for Mr Carr to do more than make fine speeches. He should say to those One.Tel workers if he hasn't addressed them yet, I will write you a cheque along with John Howard if you're left swinging. I mean that is far more valuable to them then making a fine speech.
JOURNALIST?
What about [inaudible] among other .
PRIME MINISTER:
I beg your pardon?
JOURNALIST?
What about the sharking going on among other carriers of One.Tel's consumer base? What do you think that does for the fortunes of the remaining One.Tel employees and do you have any feelings about how Telstra should .?
PRIME MINISTER:
Well there are some obligations to comment I suppose by the ACCC in relation to this. I mean, I hesitate to give a running commentary on how people should seek to protect their own commercial interest in situations like this. They have obligations to shareholders, don't they? I mean we talk a lot about the obligations that corporate people have. You've got to remember that the people who run Optus have obligations to their shareholders and their employees and they're entitled to take decisions that promote the interests of their company, their workers and the people who have invested in the company.
JOURNALIST:
How are you .
PRIME MINISTER:
Two more.
JOURNALIST?
Prime Minister you spoke about community standards in relation to employment, what plans do you have, if any, to reform parliamentarians superannuation in line with community standards?
PRIME MINISTER:
Well I think there is an argument for having a common age, namely 55. I do, I've thought that for a while, I think there is. The matter is being discussed and it's something I want to discuss further with my colleagues. But I can understand the argument which says that if it's 55 for you it ought to be 55 for me. I mean I'm a little sensitive on the subject because I'm 61, a very fit 61 you may have noticed but I am 61 and I've got to be a little bit sensitive particularly beside these younger blokes. But I think there is an argument and..
ABBOTT:
I'm 43 and I support your position.
PRIME MINISTER:
He's 43 and he supports my position.
I think there is a case, Ian, and we are quite seriously looking at it. But it's something I want to talk to my colleagues about and you know I think we've also got to pay some regard to the fact that some people who give up business and professional careers, go into parliament, lose a seat after short period of time. The process of re-entry and adjustment is not easy, and perhaps if you are going to change the rules in the future, in relation to people coming into parliament in the future, then you perhaps have got to make some kind of arrangement in relation to that. But I understand the argument and I'm sympathetic to it and we are examining it and I'm talking further to my colleagues about it.
JOURNALIST:
. perhaps the Commonwealth contribution is too much, not just the age issue. Is that something that.
PRIME MINISTER:
Well the thing I get most assailed about is the age issue. I mean you've got to look at the contribution against the pay and it's long been my view that senior Ministers, senior office holders are, by comparison to their private sector counterparts very poorly remunerated and I think you have to look at that as part of the deal.
JOURNALIST:
I'll do a Carl Zimmerman and steal an extra question. On Friday night you sought urgent advice on whether the Federal Government has power to ban poker machines with linked jackpots. Did you get that advice?
PRIME MINISTER:
I have got some advice. It indicates that the Commonwealth does, in what I might suggest is an ad hoc sort of way, have some influence on that. I've only just got the advice and I'm still analysing it. I was not previously aware of that, or that was not previously my belief, and I had been operating on the basis that the Commonwealth's power was limited entirely.
JOURNALIST:
Is it possible [inaudible]?
PRIME MINISTER:
Well the indication is that the only power you would have would be through the Internet power, and the telecommunications power, but not any direct..and it's too early for me to give an answer to that.
JOURNALIST:
So what happens to those amendments, those draft amendments, that were circulated.
PRIME MINISTER:
Well they're on hold. I hadn't previously seen them. They're on hold. But I mean I don't, I mean I have to examine the practicality of the legislation as it now stands and the practicality of using that particular power in relation to a limited area of the operation of poker machines. We're talking about a very limited area. But look I've only just got the advice I haven't properly.
JOURNALIST:
Tim Costello's point have any influence on you, his point was it's this linking that enables huge jackpots to be paid out.
PRIME MINISTER:
Yeah I understand that point and some might argue that that is a particularly bad aspect of poker machines. Some might argue that and I'm prepared to look at that argument. But we're not, I mean we recognise that there is an established gambling activity through poker machines, we're not, I have to say now, we're not seeking to dismantle that in any way but we don't want to see a spread. I mean my argument has always been the realistic thing about gambling, is to try and stop it spreading further rather than rather naively pretending that you can dramatically wind it back. Thank you.
[ends]