Australia Day

Australia Day is meant to provide a formal recognition of the existence of 'Australia' by commemorating the arrival of the First Fleet in 1788 at Sydney Cove and the raising of the Union Jack flag of Great Britain by the first Governor, Arthur Philip. Prior to 1988, Australia Day was quite innocuous with low key celebrations, if any, announcement of public recongition 'honours' recipients and generally it was taken as a public holiday with little fanfare. Re-enactments of the raising of the Flag attracted as few as 200 people at Sydney Cove and the day largely passed without much activity or interest, apart from those going to the beach if the weather was hot.

From the 1988 Bicentenary onward however that changed and Australia Day became the large event it is now and correspondingly increasingly controversial. With this expansion came renewed debate as to the significance of the event and its relative meaning - for the indigenous community it became a constant reminder of the start of the colonisation; for others it retained a connection to Great Britain when Australia was moving into its own cultural identity; for migrants whom did not come from the United Kingdom, it remained a curiosity but little else. So it does raise the question as to whether this is the most apt date to commemorate Australia as a whole or whether such a day is better suited to other significant events such as Federation Day or ANZAC Day both of which have national significance for the country as a whole.

Federation Day commemorates the then six disparate British colonies becoming a single Commonwealth of Australia on 1 January 1901. There is no single answer to the question of the most appropriate date for Australia Day and public opinion polling continues to show a majority of support remains for leaving the current date in place, albeit that this support is less pronounced now than years ago.  

2018 - a year of shareholder voting strikes on corporate remuneration

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It's not surprising given the raft of allegations concerning the conduct of Australian banks at the Royal Commission into Banking, Superannuation and the Financial Services Industry' plus various scandals with other corporations, that shareholders are showing their displeasure at the level of remuneration paid to senior executives and directors on ASX listed companies.

Under the Australian Corporations Act 2001 (Section 300A), companies listed on the Australian Stock Exchange (the ASX), must present a remuneration report at every Annual General Meeting which sets out the policies for the amount of remuneration paid to key management personnel as established by the company's governing Board. Key management personnel are typically the Chief Executive Officer and senior executives including directors on the Board itself. The report must show the nature of the remuneration and exact value including salary, bonuses, short and long term incentives, options on shares and an explanation on performance hurdles which apply.

Since an amendment to the Act in 2011, there is now a two strikes voting power and re-election process for the Board itself should shareholders find the remuneration report repeatedly unacceptable. What this means is that for the first strike, a 'no' vote of 25 per cent or more of the votes cast rejecting the adoption of the remuneration report at the Annual General Meeting is needed. Should this occur the Board is required to provide an explanation on the proposed action the Board will take or a reason for taking no action on the remuneration report. If, in the following year at the next Annual General Meeting, a 'no' vote of 25 per cent or more occurs again, there must be a 'spill' motion of the positions of all members of the company Board responsible for the remuneration report at that meeting. 

For the spill motion of the Board to succeed, the resolution must be passed with 50 per cent or more of eligible votes.  Should the 'spill' motion succeed, within 90 days the directors must stand for re-election to the Board.

In 2018 there were a record number of first strikes for many companies -

Company Name and % of votes against the remuneration report:

National Australia Bank  88.1%
Mineral Resources  63.62 %
AMP  62.20%
Telstra Corporation  61.98%
Harvey Norman  50.63%
NRW Holdings  49.05%
Westfield Corporation 47.50%
QBE Insurance  45.60%
Goodman Group  45.46%
Tabcorp Holdings  40.40%
Myer Holdings 38.17%
Austal Limited  37.24%
Karoon  37.05%
Computershare  31.89%
Healthscope  29.29%
APA Group  24.96%

Many other companies received a high level of 'no' votes but not sufficient to reach the 25% threshold of a first strike. These include Ramsay Healthcare, MYOB, Japara Healthcare, Challenger Limited, JB Hi-Fi, Seek, Qube Holdings, IOOF Holdings, APN Outdoor, Coca-Cola Amatil. All of the companies with a first strike will need to work hard to avoid a second strike in 2019.

AMP's epic fail - The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

The departure of AMP Board Chair, Catherine Brenner and Corporate Counsel, Brian Salter following the earlier resignation of Chief Executive Officer,Craig Meller should be seen as just the beginning of an essential overhaul of this once trusted company. AMP has seriously breached legal obligations and corporate governance principles and requirements. 

Essentially AMP has been found by the Royal Commission to have committed two serious categories of misconduct, potentially criminal in intent: the first being the deliberate effort to blindside the Australian Securities and Investment Commission (ASIC) on at least 20 separate occasion regarding the theft of client funds. The second being the altering of an alleged independent report by Clayton Utz to ASIC with 25 different versions being 'workshopped' by AMP including the participation of the Board Chair.  

In its own corporate governance statement, AMP states its goal is -

"Acting ethically and responsibly AMP wants to create a better tomorrow for our customers, employees, business partners, communities and shareholders. Everything we do, every decision we make has an impact, not only on the long-term success of our business but also on the lives of our customers. We are committed to acting with professionalism, honesty and integrity so all our stakeholders know they can trust us to do the right thing". 

How hollow this statement now reads.

In terms of its own Code of Conduct, what AMP expects of their staff  -

"We trust you will act in the best interests of AMP, its customers, business partners and shareholders AMP is proud of its reputation for delivering on its commitments and relies on your commitment to speak up. We put adherence to these principles above financial gain.

You will not be criticised or penalised for any loss of business resulting from adhering to these principles and other mandatory policies and instructions. We all make mistakes but at AMP we act quickly to rectify errors and learn from our mistakes".

Was this Code also applicable to AMP's Board of Directors ? 

With a market capitalisation of $14.9B, there is a justified public expectation that AMP should set a high bar for corporate governance. 

Ship of fools, sea of idiots - the epic fail of established political parties

Ship of fools - Shutterstock 

Poorly considered policies, support for narrow sectional interests, short-termism, limited democratic participation processes and capture by elites - the modern landscape of Australian political parties. It is little wonder that there is widespread disaffection with the wider community for the established political parties of the Liberal, National and Australian Labor Parties in Australia

Across a range of major challenges, the political parties have failed to effectively navigate solutions and responses to significant threats to community well-being and, in some cases, actual survival. A cursory look reveals the scale of failure across significant issues -

• Energy: the National Electricity Market has needed reform for almost a decade both in response to the changing mix of supply (coal-fired versus renewable energy) and the advent of distributed energy generation. Excessive power supply prices, perverse incentives for infamous poles and wires upgrades and an almost oligopoly market have been the result.
• Gas: this resource deserves a special mention. The failure to provide a quarantined level of gas supply to be available for Australian households and businesses by both the Coalition and Labor parties is an epic fail. The Australian community has been left exposed to international price competition for its own resources. 
• Balancing natural resource exploitation with wider environmental and social impacts: the suggested economic benefits of the Adani Carmichael coal mine in Queensland's Galilee Basin have been widely disputed with the higher risks far outweighing any other consideration. The partial efforts of both the Coalition and Labor Parties to protect the Great Barrier Reef has been hap hazard and inconsistent.
• Excessive over development in urban metropolitan centres: for the major cities of Melbourne and Sydney, property has been allowed to become a speculative business venture rather than a basic need. Over development has been permitted despite the thin veneer of 'planning controls' and 'planning strategies'.
• Failure to prepare the Australian community for climate change: climate change is a reality and there has been inadequate attention paid to the need for preparing the community for the impact of higher temperatures and extreme weather conditions. New environmental building structures and removal of heat traps in urban centres still remains novel rather than practice. A raft of other measures relating to health, water supply and land use remain inadequate.
• Tax reform promised, never delivered with high corporate tax avoidance: The burden of taxation is particularly high for middle wage and salary earners, self employed professionals and middle businesses. Yet the political parties efforts to tackle major corporate tax avoidance has been minimal and only after public information comes to light through non government investigations and scandals.

The Australian Labor Party (ALP) came into being formally in 1908 changing its name to the current title in 1912. Its origin is however much earlier and arose from striking pastoral workers in Queensland in 1891. Initially the party was called the United Labor Party. The core of the ALP and its most powerful segment remains its union base, however unions in Australia only represent 39% of public sector workers and 11% of private sector workers.

The Liberal Party of Australia was formed in October 1944 by the then Leader of the Opposition, Robert Menzies (who belonged to the United Australia Party) and brought together 18 non Labor political parties and organisations. The Liberal Party has been in a coalition with the National Party since 1923.

The National Party  adopted its current title in 1982 but previously was the Australian Country Party since 1922. Its origins came from the Australian Farmers Federal Organisation which had candidates elected in 1920. It remains very much a farmer/grazier organisation in regional areas despite efforts to expand its appeal with the exception of Queensland. In Queensland it is the dominant part of a combined National Liberal Party (LNP).

The three established parties have become structural problems within themselves with internal faction disputes often taking priority and attention. Professional political operatives including generational political families are often now the most likely candidates in preselection for Parliamentary seats with a constant challenge to encourage experienced outsiders to participate. It should be no surprise that the rise of minor parties has been the result and now is increasingly necessary in the current political landscape.