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Why should our politicians be the only people who are unaccountable?

Over the last couple of decades, organisations throughout society, whether they be charities, not-for-profits, unions, or corporate boards, have seen increasing requirements for more transparency and accountability

The Australian Charities and Not-for-profits Commission (ACNC) was established in December 2012 to, in part, “maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency.”

In November 2016, the Registered Organisations Bill established a dedicated Registered Organisations Commission to “promote efficient management of organisations and high standards of accountability of organisations and their office holders, to their members”.

Now the spotlight has turned towards the corporate world and the responsibility of corporate board directors.

In May 2018, the ASX Corporate Governance Council published a consultation draft of proposed corporate governance principles and recommendations.  The following appraisal by Clayton Utz outlines some of the key proposals:

  1. The role and responsibilities of the Board

The proposals, if implemented to the full extent drafted by the ASX, have the potential to import the most fundamental change in the approach to corporate governance of listed entities that has occurred for many years.

A consistent theme throughout the proposed changes is requiring the board of directors to discharge their responsibilities having regard to the interests of a broader group of stakeholders than simply shareholder interests. For example:

  • Under the Board Charter, the Board is responsible for defining the entity’s “purpose”, the implication being that entities are explicitly expected to have a positive impact on its stakeholders and society at large.
  • The Board and Management are expected to instil a culture across the entity of acting lawfully, ethically and in a socially responsible manner ie. be “good corporate citizens”. The explicit reference to a listed entity’s “social licence to operate” is designed to compel entities to ensure a broad range of stakeholders are borne in mind.
  • The Board is expected to define the entity’s “core values”, which must include providing positive outcomes for a variety of stakeholders, including employees, customers, local communities and shareholders, and not just shareholders.
  • The Board must ensure that it reviews the listed entity’s risk management framework so that it is taking into account long-term risks (such as climate change, environmental and social risks) that correlate with broader stakeholder interests.
  1. Skills and composition of the Board

The ASX proposals respond to a growing concern across the corporate community that directors need to have a requisite level of relevant skill and knowledge in order to properly perform their oversight function over management. For example:

  • Increased emphasis on directors having “knowledge of the entity and the industry in which [the entity] operates” in order for the Board to be effective.
  • Reformed Board “skills matrix” process so that boards are transparent in disclosing the skills and knowledge the Board requires, and comparing that to the existing skills and knowledge of the current directors.
  • Explicitly highlighting how the “currency of a director’s knowledge or skill” or the impact of “other commitments” can inhibit the director’s ability to properly perform their oversight and monitoring responsibilities.
  • New emphasis on professional development for directors in a number of key areas such as the entity’s structure, business operations, history and culture, as well as legal duties and responsibilities as a director, and a basic level of understanding of accounting matters.
  1. Diversity

The ASX changes to the Diversity Policy Recommendation 1.5 reflect calls for increased diversity amongst senior management and leadership positions across the corporate communities, as well as normative changes in how society values diversity. For example:

  • Diversity at the board level is now seen as an “asset to listed entities and a contributor to better overall performance”, which is reflective of empirical evidence
  • New emphasis on “numerical, measureable objectives” for diversity at all levels of a listed entity, include the composition of its board, senior executives and workforce generally.
  • The explicit target has been set for listed entities to have not less than 30% of its directors of each gender on the board within a specified period, representing a shift away from “aspirational objectives” to hard, numerical targets.
  • Board composition should now factor in other aspects of diversity in addition to gender, such as geographic and cultural.

Perhaps understandably, this was met with resistance from the business community.

Today, the SMH reported that the Labor Party national conference intends to debate an amendment that would make company directors liable for failing to uphold their corporate social responsibility under a proposal designed to stamp out wage theft, environmental exploitation and unconscionable conduct exposed by the banking royal commission.

As I read the principles and recommendations from the ASX, the thing that struck me most forcibly is that there are no similar expectations or accountability for government and parliamentarians.

Why not?

16 comments

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  1. Shaun Newman

    Indeed Kaye, if only we could give them the same piece of stock that their employer mates give employees each and every day and get them to measure up to KPIs as we have had to.

  2. Bronte ALLAN

    If only what you are suggesting could come true Kaye! We certainly NEED all our Politicians & their parties to be held accountable for any & all decisions, votes etc they have when in the Parliament. Certainly, things like grossly over-claims for all their bloody so-called “fact finding” overseas jaunts, even those conducted here in OZ also, the waste of time & resources etc when ever they have “question time” (?), the unnecessary & often pointless bloody inquiries & white/green papers etc they seem to want to deal with etc etc. The vast amounts of “our” money they give themselves as “salary” (?), the vast amounts of “our” monies they waste on unneeded bloody “official” duties they all seem to want to perform, all over Australia etc. And the lists of these things goes on! Perhaps the Churches etc could also be held accountable as are all the Charities now. The list could also include other organisations/companies etc.

  3. New England Cocky

    National$ politicians are beyond reproach . . . you ask them. Many are just like former leader Barnyard Joke, representative of the Notional$ in New England until the next election. They cherry-pick their way through the “National$ Christian family values” of Adultery, Alcoholism, Avarice, Bigotry, Hypocrisy, Misogyny, and Racism, selecting those best suited to their self-serving lifestyle funded by the Parliamentary Allowances Scheme at great expense to the Australian taxpayer, while they build the worst third world economy in the OECD for the benefit of the foreign owned multinational corporations that legally minimise taxation to zero return to Australian voters but provide maximum profits for the off shore shareholders.

    The Liarbrals are no better.

  4. Matters Not

    Yes, Bronte ALLAN may well we put “our money” in commas because we have no control as to whether we pay it or not and further we have no control over where it’s to be spent. At one level, I suppose it’s a matter of the correct tense. No longer – is our money but was our money.

    Currently we elect governments every 3/4 years and ‘in between’ they can virtually do as they like with what was once our money. In a restaurant, we pay (or not) after the meal. With government, we pay in advance and then we must accept what is served up. Politicians of course argue that they are accountable because they have to be elected (or not) every3/4 years.

    Seems to me that accountability could be vastly improved if the citizens had their say on a more regular basis. (We have the technology.) Sure not for every line item but for significant expenditure over (let’s say) X billion dollars. If that were the case would we have signed up for 12 submarines, 60 plus fighters and so on?

    All we lack is the political will (and perhaps the imagination) to make it happen.

  5. Doug Young

    Actually it isn’t totally correct that politicians are the only ones to be unaccountable. The same applies to all bureaucracies (especially Public Trustees), all so called watchdogs (especially the Crime Cover up Commission), the mainstream media and, the legal / judicial racket (especially kangaroo tribunals)

  6. OldWomBat

    Perhaps politicians’ “salaries” could be placed in a trust that they cannot access during their tenure, except for a smallish living allowance. At the expiration of their term an assessment would then be made by an independent panel, including representatives from across the economic spectrum with one person one vote, to decide how much of the accumulated funds in their trust a particular politician is deemed to have earned and therefore would be entitled to.

  7. Diannaart

    OldWomBat

    Would these trust funds earn interest?

    I like your thinking, wish it could com true.

  8. Kaye Lee

    What a difference a few months make. It was only April when “The treasurer, Scott Morrison, smacked down a backbench push for the Turnbull government to back a new coal plant, arguing that high-efficiency coal does not mean cheap energy, and taxpayers would also be left on the hook.”

    Morrison declared on Wednesday the government was not interested in subsidising any source of energy.

    “The days of subsidies in energy are over, whether it is for coal, wind, solar, any of them,” the treasurer said.

    “That is the way I think you get the best functioning energy market with the lowest possible price for businesses and for households and that is what the national energy guarantee and our energy policies are designed to achieve.”

    https://www.theguardian.com/australia-news/2018/apr/04/scott-morrison-new-coal-fired-power-station-not-the-answer

    I hope the Labor Party are collecting these little snippets. The campaign writes itself.

  9. Matters Not

    Re:

    The campaign writes itself.

    You would think so. And perhaps it does with rational people. But there is also a mountain of evidence that when it comes to voting, many (if not most) people are driven more by emotions (fear in particular) rather than rationality. Seems to me that Morrison, Dutton et al know that and therefore promote messages that evoke fears to the exclusion of all else.

    It’s an ‘insight’ often explored on the PBS Newshour with Mark Shields and David Brooks.

    https://www.youtube.com/watch?v=1gfDwEDPb6U

    Who gets the better of this ‘debate’ and why? Why the Democrats don’t keep repeating Trump’s promise that Mexico will pay for wall is beyond me.

  10. Kaye Lee

    Sadly true MN. As shown by Hanson 2.0 for one. Or Craig Kelly, that champion of democracy whose preselection has been a captain’s pick (under duress) for two elections. Or Fraser Anning who is too out there for even PHON and Katter. Mind you, I don’t think anyone actually voted for Anning but the people that Pauline attracts are as dodgy as it gets.

    We don’t have debates. We have pitched battles of people hurling dung at each other.

    UPDATE: Anning gained just 19 first-preference votes.

    Some interesting history….

    Anning grew up in north-west Queensland on Wetherby Station, one of the Anning family’s pastoral properties near the isolated town of Richmond. Anning is the great grandson of Charles Cumming Stone Anning, a British pastoral squatter who came to the Australian colonies in the mid 19th century to acquire landholdings. In 1862, Charles and several of his adult sons established the Reedy Springs property north of Hughenden. The family soon expanded their claims by forming the nearby properties of Chudleigh Park, Mount Sturgeon, Charlotte Plains and Cargoon. All this land was occupied at the time by various Aboriginal clans and subsequent frontier conflict occurred as the Annings forcibly took control of the land from the local people. In response to the spearing of cattle, Charles and his sons would ride out with firearms, attack Aboriginal campsites and capture young boys who survived in order to use them as labour on their cattle and sheep stations.

    In 1865, the Annings employed W.R.O. Hill, an officer in the paramilitary Native Police, to be their station manager at Reedy Springs. Hill, who had experience in warfare against Aboriginal people, wrote in his memoirs that at Reedy Springs the “only wise thing to do on seeing a black was to shoot and shoot straight”. Frank Hann, who was another pastoralist in the region who regularly participated in extrajudicial punitive raids on Aboriginals, described in his diary in 1874 how he saw “Anning just come back from hunting blacks.”

    Fraser Anning’s grandfather, Francis “Frank” Albert Anning, spent much of his time at Reedy Springs but also bought into further properties such as Wollogorang, Savannah Station and Compton Downs. At Wollogorang in particular, Frank Anning had to surround his hut with wire mesh to prevent spear attacks and was knocked unconscious by a waddy in another incident. One of Frank’s sons was W.H.(Harry) Anning who took up the Wetherby property, and whose wife gave birth to Fraser Anning in October 1949.

  11. Kronomex

    Bloody hell! Scummo has become a man of rubber to bend over backwards and bite his own arse –

    https://www.smh.com.au/politics/federal/morrison-backs-national-anti-corruption-commission-following-labor-demands-20181213-p50lzf.html

    Massive election desperation disguised very badly as “good policy and gubmint” from a scared little man.

    Of course he’s going to delay and delay and delay…

    https://www.smh.com.au/politics/federal/scott-morrison-pledges-religious-discrimination-act-but-delays-protections-for-gay-students-20181213-p50lyh.html

    I really can’t describe how I feel about him and his gang of insane clowns without getting really nasty. So I’ll leave it up to your imaginations.

  12. Paul Davis

    Kronomex! Tsk tsk tsk.
    I often find it difficult in my twisted plebian heart to recognise genuine noblesse oblige when it occurs.
    Our fearless Dear Leader (rubbergums mcshoutyface) has condescended so far in the last few months in extending his warmth and compassion to the lower orders as evidenced by announcing a thorough review of aged care, removing those little children from guano island, protecting the rights of decent godfearing folk from persecution by heathen deviant leftists and now ensuring that greedy grubby bolshy swine can no longer shove their snouts into the public trough by setting up a federal ICAC thingy….
    What a man! What an inspiration to all especially those swinging voters…

  13. Kronomex

    Paul, that was good for a laugh.

    “What an inspiration to all especially those swinging voters…” Could it be that the dim reaper (sleazer), I mean the pastor would like to see a lot voters dangling and swinging as a warning to anyone who does not dare to vote LNP?

  14. Paul Davis

    “Dim Reaper” 🤣 classic

  15. Cynthia

    I vote “rubbergums mcshoutyface” the most wonderful name for our new “Dear Leader”. I could not stop laughing when I first read it last night; and I’m still giggling today, just had to look it up again. Thankyou for the giggles.

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