Murdoch attack dogs, Clem Newton-Brown, AXA AGM, Rick Allert and union thugs

4. Why Murdoch attack dogs hate anything Green

By Stephen Mayne

The Crikey editorial yesterday honed in on the feral anti-environmentalism displayed this week by Murdoch attack dogs Andrew Bolt and Terry McCrann, even after six credible CEOs tolled the bell and declared we must get serious about climate change.

Having spent three years occupying the Herald Sun office next to McCrann and two down from Bolt, I can provide some insights into their modus operandi. McCrann has a great brain but he loves to duck out for a coffee and a smoke and it is on these occasions that you get to talk through the issues, sometimes even influencing his columns.

Jeff Kennett once alleged that I'd poisoned McCrann and turned him into a critic of his government and there's an element of truth in this. McCrann never baulked in backing his business editor during the mid-to-late 1990s as the two of us got further and further into dispute with Kennett over his various ethical blind spots.

Fast forward a few years and it is Bolt who is chewing McCrann's ear and influencing his columns. The similar attacks on those preaching climate change doom and gloom is a strong example, as were the co-ordinated attacks on Peter Costello last month.

McCrann generally has more credibility than the hysterical and offensive Bolt but his one big weakness is a complete sycophancy towards the Rupert Murdoch agenda, no matter what the facts may be. Today's column on News Corp's poison pill may as well have been written by a delusional Murdoch himself as McCrann declared: "It's entirely likely that the pill will be endorsed near-unanimously. Despite their litigation, it's clearly in the interests of the instos (and all shareholders)."

Rupert is no supporter of the environmental movement which probably reflects the fact that he personally has been responsible for more tree destruction and waste paper than anyone in the history of humanity.

At university you learn about this thing called externalities – the damage that a company's products can cause the wider community. One solution is to tax companies to help pay for the damage and discourage them from producing too much of their product, which is precisely where a carbon tax comes in. Coal is poison and it should be taxed more heavily than other forms of energy because of the long-term damage of climate change.

The fossil fuels industry bleats about stranded assets if Australia introduces a carbon tax. However, if a carbon tax was finally accepted in Australia, wouldn't the debate quickly move on to other forms of new taxes to penalise those who damage the environment? Rather than stranded coal-fired power stations, you might then find yourself talking about stranded printing plants if governments started taxing newspaper companies for the cost of their waste.

So next time you read an anti-Green spray in the Murdoch press, just remind yourself that the company controls 70% of Australia's newspapers but trashes the environment, destroy millions of trees and creates an awful lot of mess along the way.

Dead tree journalism is sadly not an efficient allocation of community resources, so of course these dinosaurs will talk their own book and attempt to discredit anything which vaguely moves towards sending more accurate price signals to those who cause environmental damage.

8. "They rort it too" is no defence

By Stephen Mayne

Isn't it hilarious how the only defence that any Liberal can come up with to the Howard Government's substantial weakening of Australia's campaign disclosure laws is that there are also rorts exploited by the unions-ALP conglomerate and the Greens.

Yesterday's spray in comments and corrections by Peter Phelps, chief of staff to the last two special ministers of state, is a classic of the genre. It included the following:

At the current time, if you give $5,000 to the Greens, you can only claim back $100 in tax. But if you give $5,000 to some bogus enviro-loony front "charity" which then uses the money on a public campaign to push exactly the same line as the Greens, then the donor can claim the whole lot back on their tax. Indeed, there was one notorious example in Tasmania where a now-quite-prominent Green was arrested. His supporters then hit the solar-powered photocopy machine and started producing flyers which strongly suggested that people should make "tax-deductible donations" to a particular environmental "charity" – which, of course, would then proceed to pay the legal bills of that prominent Green activist.

Peter, I completely agree. You might remember a little Crikey campaign last year calling for Australia to introduce a New Zealand-style "Charities Commission" for greater accountability. I also called for an end to the ridiculous tax and regulation exemptions enjoyed by the not-for-profit sector, which sees the Seventh Day Adventists run a $500 million a year cereals business, Sanitarium, free of tax.

Sadly, Peter Costello took a look at this massively tilted playing field and wimped it, presumably not wanting to upset the all powerful churches, so we still haven't got any basic regulatory oversight of NGOs in this country.

Another Liberal let fly with a similar spray that included the following:

Stephen Mayne conveniently forgets to mention that the ALP-union oligarchy is the biggest political subsidy rort of all, working off income tax exemption for unions activities and funds collected. Unions provide millions to the ALP at state and Federal levels not counting their free provision of union officials masquerading as ALP officers. You'll find that the public purse suffers more at the hands of others than the Libs or Nats.

Once again, couldn't agree more. In fact, it was Crikey that recently claimed the ALP-unions conglomerate was worth more than $500 million. Union dues for workers is a legitimate work-related expense, but to the extent that the funds are pumped into the ALP, they shouldn't be tax-deducted.

The point of my whinge is that our already heavily subsidised and largely unregulated system of campaign finance disclosure is about to get a whole lot worse and I'm still yet to find anyone who can defend the indefensible. These are the three key questions:

1. Why aren't political parties required to release timely and full disclosures of their funding sources? Figures that are up to 19 months old and don't include a balance sheet are totally inadequate when my kinder has to disclose its net assets on a more timely basis.

2. When public funding already delivers an average of almost $20 million a year to our entrenched political duopoly, why are we changing the law to deliver an estimated $22.5 million in extra taxpayer contributions over the next four years by lifting the tax deductibility of donations from $100 to $1500 when things like mandated child support payments for divorced parents are not tax deductible.

3. Given the scandal of Australia slipping a dodgy political regime in the Middle East $280 million on the quiet, why are we substantially weakening out domestic system by lifting the donation disclosure threshold from $1500 to $10,000?

Over to you, Mr Phelps. Whilst toughening corporate governance requirements for the corporate sector, why are you weakening transparency and accountability for our political system? Surely you can do better than that old favourite of "they rort it too".


14. The Liberal candidate who gets on his bike

By Stephen Mayne

Here's an enviro-friendly stunt that no wannabe Liberal politician has tried before. Clem Newton-Brown, the former Melbourne deputy lord mayor and endorsed candidate for the Labor-held seat of Prahran at this year's Victorian state election, has bought himself an electric bike to get around the electorate.

The barrister is seen riding around Prahran most days towing a Liberal billboard with a picture of himself. The lad also opened his campaign office late last year – a full 12 months before polling day on November 25. Talk about keen. Residents have reported receiving a couple of postcards from Clem introducing himself, so there's obviously plenty of campaign cash to spend as well.

Our spies reckon constituents are more interested in talking about the $2000 bike than Clem's policies, but it's all about branding. Needing a 4% swing to unseat Labor's Tony Lupton, the old anti-Kroger-Costello faction campaigner will probably need a 1000cc motorbike to climb the mountain in front of him given the parlous state of Robert Doyle's Liberal opposition at the moment.


21. Is the AGM dead? Axa's almost was

By Stephen Mayne

Is the corporate AGM dead? Well, the Axa Asia Pacific Holdings AGM certainly would have been a non-event yesterday if I hadn't turned up. Despite having 245,475 shareholders, this $10.8 billion company attracted barely 100 of them to the gathering at Jeff's Shed in Melbourne.

There were only four shareholders who spoke: a left wing woman on a disability pension who wanted the board to donate their fees to solve famine in Africa, a 70-something waffler who went round and round in circles, one of the classy Curry brothers from the ASA who only spoke very briefly against the remuneration report and yours truly, who was up and down like a yo yo from the back of the room over the 100 minute meeting.

It is true that happy shareholders are less likely to front up, but the most surprising thing about yesterday's meeting was that some quite entertaining exchanges, controversial resolutions and interesting voting outcomes didn't generate any notable media coverage. Therefore, the floor is ours.

For starters, we saw the directors' club in action as chairman Rick Allert announced the retirement of his old Southcorp mate Brian Finn and replaced him with a Coles Myer board colleague, Patricia Akopiantz. Very cosy.

Normally you wouldn't worry too much about board shuffling but Axa APH demonstrates perhaps the best example of the importance of strong independent directors. Remember when Paris-based Axa SA offered $3.75-a-share or $3.16 billion for the 48.5% it didn't own in late 2004. The independent directors spent $7 million saying "non" – and with Axa APH shares at $6.25 yesterday that decision has enriched in the minority shareholders to the tune of $2.1 billion. Nice.

Axa SA originally invested $1.1 billion or $1.25 a share. Therefore, they are now $4.5 billion in front and arguably the happiest foreign investor in Australian history but this would have been $6.6 billion if they'd succeeded in mopping up the minorities on the cheap. I had fun asking both chairman Rick Allert and the Frenchman up for re-election, Bruno Jantet, if there was any bad blood about this missed French opportunity and Bruno summed it by saying "no hard feelings".

"You're welcome to come back and offer $7-plus and we'll think about it," came the cheeky retort from the back of the room.

Rick Allert launched a spray against the excessive cost of regulation and all this corporate governance compliance so I turned this around and accused Axa APH of never taking a public stand on anything. Why weren't they part of the global syndicate of institutions suing News Corp in Delaware?

Allert didn't let his Liverpudlian CEO, Les Owen, answer any of the dozen or so questions but Les sidled up later to say that Alliance Bernstein, the outfit which manages most of Axa APH's $80 billion, prefers to pursue any corporate governance arm-twisting behind closed doors.

Speaking of institutional activism there was quite a protest against Owen's latest $4 million equity incentive because the performance hurdles kick in at 51% against the benchmark, regarded as not much of a challenge these days.

Stripping out AXA SA's 899 million shares, there were only 196 million votes in favour and a hefty 136 million against. If AMP hadn't stupidly sold their 7% stake at just $2.22 a share in June 2004, a majority of independent support might not have materialised.

Allert said the protest reflected the power of the proxy advisory houses but once again the media has missed the story of a controversial pay deal for one of our most powerful money managers who will retire at least $20 million richer from his visit Down Under. Then again, Les has undoubtedly done a good job and seemed like a nice bloke as we chatted for about ten minutes over tea and bickies after the meeting.


22. Just what was Rick Allert planning with his retirement pay?

By Stephen Mayne, proud owner of 90 Axa shares

Perhaps the most interesting exchange at the Axa Asia Pacific AGM yesterday was over the retirement pay for long-serving chairman Rick Allert. There are barely any director retirement schemes still running for new non-executive directors who join a top board these days as the corporate governance debate has concluded that NEDs should receive all their fees up-front in cash or shares.

The lump sum retirement payouts which rise with years of service have been condemned as acting like a good behaviour bond and stopping directors from resigning over matters of principle and encouraging them to hang around too long.

However, there were quite a few schemes that were grandfathered rather than closed for everyone, so long serving directors are still notching up big benefits.

Rick Allert is enjoying what will probably finish up as the biggest in history because the Axa retirement scheme gives a director five times their final annual fee salary after 15 years of service. The only competition will come from long-serving ANZ and Woodside Petroleum chairman Charlie Goode.

Allert has served for 14 years and his pay last year totalled a rather healthy $505,000, comprising a base fee of $290,460, $26,141 in standard 9% super and retirement benefits of $188,440.

Allert was re-elected for another three years yesterday and he pledged to "serve a full term", which means he'll probably retire in 2009 at the age of 66 after 17 years on the board, the last nine as chairman. However, once he's past 15 years of service, he'll no longer be entitled to any additional retirement benefits and that's where yesterday's resolution to increase the maximum NED pay from $1.2 million to $1.6 million gets interesting.

Having received $505,000 in 2005, will the AXA board give Rick a big increase in base pay once the retirement dollars stop appearing in the annual report in 2007? There's certainly plenty of head room now but Allert did pledge yesterday that the company wasn't planning increases over or above the average pay rise afforded to Australian NEDs.

I told yesterday's AGM that Allert's retirement payout would soar from $1.5 million to a record $2.5 million if the board decided to increase his base pay from $300,000 to $500,000 and this issue would be closely watched over the next three years.

No company would allow an employee to get a sudden lift in final salary just to maximise a retirement benefit, so it will be interesting to watch what happens when it is the chairman of the company who stands to benefit from such a move.

Here's a list of some of the biggest retirement payouts for non-executive chairs over the years:

Stan Wallis: entitled to $1.6 million from AMP after 17 years of service but declined to accept it in the end.
Mark Rayner: the NAB chairman collected a lump sum of $1.46 million in 2001 after 16 years on the board.
Ian Burgess: ousted as AMP chairman in 2000 but the pain was softened with a $1.07 million retirement payout after 11 years on the board.
John Dahlsen: nine years on the Woolworths board, the last four as chairman, generated a payout of $1.04 million.
Stuart Hornery: collected $992,435 in November 2000 when he retired as non-executive chairman of Lend Lease.


27. Unions thugs confirm Victoria's blowout record

By Stephen Mayne

Victorian Labor Party factional kingmaker and former Green member Dean Mighell was back to his best union thuggery yesterday when he gloated to The AFR about blowouts and delays afflicting Snowy Hydro's $120 million new gas-fired power station at Laverton North near Melbourne.

German multi-national Siemens has done their shirt on the construction contract and, facing an $80 million loss, is considering sacking the strike-prone unionised work force and rehiring a few less militant types to actually try and get the job done. Big Dean is having none of this and spoke to The AFR in the most belligerent warmonger terms:

"I have my troops on stand-by to go to the site if there's any move by Siemens," he warned. "If they do this then they will have the longest power station construction project in Australian history."

When Big Dean was causing blowouts and delays at Docklands stadium he memorably said something like: "If management don't rollover we'll have it ready for the start of the season, but it won't be next season."

Victoria's status as the blowout capital of Australia has been confirmed once again and the most expensive major projects workforce in the country comes from Melbourne, being the home of destructive and highly militant unions such as the CFMEU, the ETU and AMWU, which used to be headed by Dean's mate Craig Johnson before he was jailed for the notorious balaclava run-through at Skilled Engineering in Box Hill.

What odds that Siemens will successfully attempt to recover some of the blowout from Snowy Hydro, which is 87% owned by the NSW and Victorian Labor governments. After all, the promoters of the madly rushed June float wouldn't want any controversy given the whole exercise is being driven by Morris Iemma's desire to claim an overall cash surplus in 2005-06.

Here's a list of Victoria's blowouts in recent years. The one common denominator is heavy-handed unionism like nowhere else in Australia:

Regional rail projects: $80 million to $750 million
Commonwealth Games: $397 million to $770 million
Spencer Street: $200 million blowout for private consortium but taxpayers now sharing pain in secret settlement
Synchrotron: $100 million to $220 million
Federation Square: $100 million to $462 million after Multiplex's outrageous "go-slow"
MCG redevelopment: $423 million to more than $500 million with $70m Grocon claim now in the courts
Yolla gas field: Origin's $400 million Bass Strait project is late and way over budget with court action against Clough
Douglas mineral sands: Iluka is facing a $105 million claim by Downer-EDI's Roche Mining division over blowouts in producing the $200 project in north-west Victoria.

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