Campaign lift off, Fairfax AGM, councillor expenses, pokies, SP Ausnet, Rich List, women directors, Spark scale back and much more

November 14, 2010

Dear Mayne Report Readers,

Shortly before 6pm last night the Victorian Electoral Commission gave the all clear for a serious independent crack at the Victorian upper house and the husband and wife team of Stephen Mayne and Paula Piccinini have duly been listed here on the VEC website.

This detailed account of the platform was emailed to 3000 lawyers on Monday with the exciting news that Julian Burnside QC is publically endorsing our attempt to win the fifth and final spot in the Northern Metropolitan region. With Senator Nick Xenophon doing likewise, we're aiming to replace a "faceless man" in Labor's number three Northern Metro candidate Nathan Murphy, who hasn't even provided a phone number for voters to contact him through the VEC website. As we explained in the lawyers' missive:

Too many unionists and relatives

Whilst I'm a paid up and proud member of the journalists' union, the MEAA, there's few people who would argue with the proposition that upper houses across Australia have become excessively over-populated with former union officials.

After June 30 next year, 80% of ALP Senators will be former union officials because the union movement has a 50% gerrymander over votes at ALP state and national conferences.

In the blokey world of unions, there are plenty of jobs for the boys and in the case of Nathan Murphy, he got the job in part because his dad Tony Murphy is assistant state secretary of the Plumbers Union in Victoria.

Nathan's Wikipedia entry details a life with limited professional experience outside of student politics, political staffing and union work. Indeed, in 2006 he was involved in an unseemly attempt to unseat House Speaker Harry Jenkins from his safe seat of Scullin, which Shaun Carney described in The Age as follows:

In one of the more bizarre preselection choices in Labor history, the hard-left anointed for this seat, a Labor Party plum, a 28-year old organiser from the ALP state office, Nathan Murphy. Murphy has a Labor movement pedigree. His father Tony is an assistant secretary of the Plumbers Union and his mother, Sandra, was, until his nomination, a member of Harry Jenkins' staff. That would, at this early stage of Nathan Murphy's life, appear to sum up his credentials to be a Labor MP. The choice of Murphy was so wrong-headed that even some of the Labor Unity people who negotiated the deal were embarrassed by it.

With good preference flows, we're a chance of pulling this one off but will need lots of volunteers to cover the booths. If you fancy lending a hand on November 27, please email

Fairfax Media AGM at Crown Casino

There's plenty more below on the election but first we've just got to tell you about the Fairfax Media AGM this morning which was a strange affair. For starters, why on earth was it being held at Crown Casino which is owned by a media competitor in James Packer?

I pointed out that Crown founder Ron Walker was no longer Fairfax chairman and a more appropriate venue should be chosen next time. Chairman Roger Corbett basically conceded the point.

Crazy Jack Tilburn came down from Sydney and made the whole gathering quite unpleasant with extremely abusive rants on every resolution just because chairman Corbett recommended a three question limit per resolution and received overwhelming support for this in a show of hands from the floor.

In more than 50 Tilburn AGM rants over the years, I've never said a bad word about him on the floor of a meeting, but the attacks on the two new female Fairfax directors, Sandra McPhee and Linda Nicholls, were just too much. I got up and told shareholders that a question limit was no basis to rant against every director just as the invitation by Leighton Holdings last week that Jack Tilburn cut a cake for Wal King should not have generated his gushing supporting for massive pay packets at Leighton.

If you want to know and see more on this, just watch this Lateline Business story from last week.

Crazy Jack really is the cheapest bloke in Sydney. Chairs like David Crawford at Foster's and John Morschell at ANZ send him a fawning letter, have a cup of tea and their AGMs are sweetness and light. Yet poor old Roger Corbett imposes a modest question limit and it's like the sky has fallen in.

Anyway, the strangest thing about the AGM was that I ended up being apologist in chief for the board, editorial independence and overall strategy. This was mainly because of Tilburn but also because Michael Burd, a well known letter writer on the Middle East, and another shareholder launched a very hostile attack on the Fairfax board and its journalists, including demands that the likes of Mark Baker, Paul Ramadge, Jason Koutsoukis and Paul McGeogh be sacked.

The second speaker claimed subscriptions to The Age were being mass-cancelled in Jewish suburbs like Caulfield and even tried to connect his tirade to the fact that Fairfax is allegedly the most shorted stock on the ASX.

This bloke also repeatedly slammed the paper as "a rag", so I got up and defended the board and the company's journalists and said the attack was quite inappropriate and I'd say the same thing if the Palestinian lobby fronted Rupert Murdoch at the News Corp AGM and demanded pro-Israel columnist Andrew Bolt be sacked.

There was plenty of other interesting discussion at the Fairfax AGM and we've edited the audio highlights as follows:

Can we hear from the auditor why we overvalue intangibles by $2 billion? Take the write down on November 23 with this restructure

How are chairman Roger and CEO Brian getting along given they came from different board factions?

Does BRW make a profit, how much has been spent on and any comments on corporate actions at Ten Network?

Speaking in favour of Michael Anderson and does he retain an interest in Austereo?

Supporting the re-election of Nick Fairfax

Is it the intention of "CEO-in-waiting" Greg Hywood to be a professional non executive director?

Can we here from Sam Morgan and why doesn't the $700m man own a single Fairfax share?

Speaking in favour of Linda Nicholls and commending Fairfax on their diversity in the company.

What has the board done about work place bullying given DJs chair Bob Savage is up for re-election?

Keeping the councils of Northern Metropolitan open and accountable

A key part of the state election platform is a promise to keep the 8 councils in Northern Metropolitan open and accountable and we've spent the last three nights watching proceedings at Hume, Whittlesea and Moreland respectively. Disclosure of councillor expense claims is an obvious starting point.

After the British political expenses scandal, you would think politicians in robust democracies would get with the program and agree to regular public disclosure of their expense claims.

At Manningham City Council we had a lengthy debate earlier this year and, frankly, finished up with a disappointing outcome. The officers bought the line that disclosure would lead to embarrassing media stories and reputational damage, so the only change that received majority support was to annually publish the total aggregate claim by all councillors against an overall budget.

Sadly, this means there will be no breakdown of the big or small spenders and therefore no discussion as to who is working hard and who is having an excessively good time.

After Manningham's wimpy reform effort, I decided to find out more about the disclosure practices at other councils.

The Labor-controlled Darebin City Council in the inner north around Martin Ferguson's Federal seat of Batman was the first to receive some attention where a question was asked on expenses disclosure reform.

Acting mayor Gaetano Greco said they'd made the system more rigorous by involving the audit committee which has a majority of independent members. However, there was still no public disclosure.

Darebin has traditionally been dominated by Labor until comedian Trent McCarthy was elected as the first Green councillor in December 2008. McCarthy is the warm up act and MC at many Green functions and has been parachuted in to contest the seat of Preston on November 27 after another comedian candidate bailed out to pursue his career overseas.

Like most Greens, McCarthy is big on transparency but when he first called for a review of Darebin's councillor expenses disclosure, he failed to get a seconder from any of the 8 Labor councillors.

However, once the issue was raised from the public gallery, McCarthy moved for another review at the October council meeting and, with the public watching on, got the numbers. However, factional warrior and long time Labor staffer Cr Steven Tsitas launched quite a bitter attack as was noted in Crikey at the time.

Darebin's neighbouring council of Moreland had a similar experience when John Kavanagh, an independent councillor who is a DLP candidate on November 27 and the brother of DLP upper house member Peter Kavanagh, nagged his Labor comrades until they relented three years ago and agreed to annual web disclosure.

I attended Moreland's November council meeting last night and commended their early adoption to disclosure but suggested they perhaps get with the program and move to a quarterly model.

To the north of Moreland is Hume City Council which really stepped up in December 2009 and embraced the Melbourne City Council model of quarterly website disclosure. Check out this latest disclosure by the Hume councillors.

I attended the Hume council meeting in Craigieburn on Monday night and submitted the following written question:

What is the history of quarterly web disclosure of councillor expenses and what have been the pros and cons of this disclosure.

The answer was that everything was fine and it was good not to get nagged for the information any more.

This led to a visit on Tuesday night to Hume's eastern neighbour, the 100% Labor dominated Whittlesea City Council, where the following written question was submitted:

Darebin is reviewing its councillor expense claims disclosure and Hume has moved to quarterly online disclosure. What does Whittlesea do and why not adopt the Hume model given Hume last night said publically that “council does not believe there are any negative consequences of this disclosure”.

The reply out there at South Morang, with just myself and one local News Ltd reporter sitting in the public gallery, was that Whittlesea discloses nothing but they would review the system.

There certainly seems to be some correlation between poor disclosure and Labor dominated councils but it shouldn't be too long before the dominoes start falling on what should be a straightforward issue of transparency.

And that includes Manningham!

Moreland blazes the trail on pokies policy

Moreland Council last night unanimously passed a motion to push ahead with its trail-blazing special rates proposal on gaming operators. In response to a question from former mayor Lambros Tapinos, CEO Peter Brown said he'd heard informally that Woolies had decided against launching another Supreme Court challenge and was instead lobbying the state government to change the law so that council's can't introduce special rates.

As was noted in this Crikey story, Woolies has been getting all sorts of favours out of John Brumby and I'll be in Brisbane on November 18 running for their board on a no pokies platform at the Woolies AGM.

The pokies have barely got a look in so far during the campaign but the Local Government Working Group on Gambling (LGWGOG) run by Darren Ray at the VLGA will be launching the group's state election platform at the Coburg Town Hall next Monday at 10.30am.

This is appropriate given the great work Moreland is doing fighting the pokies. The launch will involve Moreland Mayor Stella Kariofyllidis and LGWGOG chair Felicity Leahy, a very effective Whittlesea officer fighting a proposal for pokies at the Royal Mail Hotel.

As well as launching LGWGOG's State Election Platform, Darren Ray's group will also launch Moreland's Gambling Storyboard for CALD communities, for which they recently won the NSW Community Relations Commission National Multicultural Marketing: Government Sector Award. Moreland are launching their storyboard so that it can then be used by others in the community and in local governments.

We picked up a copy of the story board last night and it certainly is an innovative way of informing CALD communities about the wide range of council services.

Tim Costello and Nick Xenophon urge everyone to attend pokies public forum on November 23

Check out this video shot by Tim Costello, Nick Xenophon and a range of other participants involved in an upcoming pokies forum in Melbourne for the state election. The Minister and his shadow are also being invited and the details are as follows:

Date: Tuesday 23rd November
Time: 9am – 11am
Venue: Cathedral Room
Cardinal Knox Centre
383 Albert St
East Melbourne

Around the grounds on the pokies

Check out this package of past encounters and details on the 2010 board tilt with pokies giant Woolworths.

Check out this interview with Senator Nick Xenophon about why the pokies matter in this state election.

There is also a big pokies issue brewing in Castlemaine as you can see from flyer for the Enough Pokies in Castlemaine event on November 29. And how about this front page treatment in the local paper:

Epic brings out the big guys – are The Highlanders hiding?
By Andrew McKenna, Castlemaine Independent, October 27, 2010

Keeping the pressure on Singapore's $130m Brunswick Terminal Redevelopment

We last covered the issue of a proposed $130 million redevelopment of SP Ausnet's Brunswick Transmission Terminal in our October 14 edition and we've got a bit more to add now.

On Monday, the Brumby government put out this press release guaranteeing community consultation in search of alternative solutions to building twelve 25 metre steel towers next to a soccer oval and the Merri Creek in a residential zone with an environmental overlay.

I turned up at the SP Ausnet interim results presentation at The Westin yesterday and had this exchange with CEO Nino Ficca where he committed to ongoing dialogue with the local residents.

The issue was also raised at Moreland's council meeting last night and Green councillor Jo Connellan said she was closely involved in what was an innovative consultation process and to the credit of SP Ausnet they did not appeal the original council decision not to grant a permit, even though a controversial officer report recommended the proposal proceed.

Malcolm Fraser lets fly

Pollster Gary Morgan was his usual ebullient self as host at a lunch put on by the Victorian branch of the Australian Institute of International Affairs in Melbourne yesterday.

Malcolm Fraser was the first speaker in a series on foreign policy by former prime ministers. Bob Hawke and John Howard have agreed to come to Melbourne next year and Malcolm Fraser has set the bar very high with arguably his widest ranging assessment of Australia's place in the world over the past century.

You won't agree with all of it but do take the time to have a read of what was a cracking no holds barred speech by Malcolm Fraser.

And two of those speakers at the Fairfax AGM this morning should note that none of the Fairfax papers reported a word of Fraser's comments about issues in the Middle East.

Blasting Stephen Johns for a shocking scale back at Spark Infrastructure

The Leighton Holdings AGM last Thursday was covered in last week's bumper edition but it's important to keep the pressure on public companies which blatantly shaft retail investors so here is the transcript of our criticisms levelled at former Westfield finance director Stephen Johns when he was up for election.

Stephen Mayne: My only gripe with Stephen Johns, and he does have a terrific record, is that over at Spark Infrastructure only last week, he has appallingly shafted his small shareholders and declared a shortfall in a capital raising and given it to the big end of town, when his own small shareholders were applying for it.

It was a very unusual situation - some of the worst treatment I've seen of retail investors. Similarly with what McMahons did with a preferential shortfall allocation to Leighton, was a similar example of look after the big end; shaft the retail.

I simply want to put on the record here that retail investors noted that discriminatory treatment, favouring the big end of town, at Spark, and I hope that we don't see something comparable from Leighton. If you do a capital raising, when it comes to deciding who gets the shortfall, is it your own retail investors or is it just the clubby clients of the underwriters UBS and Deutsche, in the case of what happened at spark?

Chairman David Mortimer: I can't comment on Spark - I know nothing about it, but I do know that our policy is to look after our shareholders including our small shareholders, so I don't think you will see that problem with us.

A response from Spark

And here is the response which just came through from former NSW Young Labor President turned Spark spindoctor Mario Falchoni which doesn't answer the question as to why a minimum allocation of $10,000 worth of extras wasn't applied given much larger minimums were dolled out by the likes of Onesteel, Fairfax Media, Santos, Billabong, Wesfarmers and Bluescope Steel in similar situations last year:

Spark Infrastructure implemented a scale back of applications under the Retail Entitlement Offer for a number of reasons which I shared with you in our earlier discussion. Each of these reasons was motivated by the need to comply with relevant legislative requirements to provide equal treatment to all securityholders (s601FC(1)(d) of the Corporations Act), and to seek an orderly aftermarket and stability in the security price. Such scale backs have occurred in a number of recent non-renounceable rights issues in comparable circumstances.

I am pleased to say that over 97% of all retail securityholders were allotted their applications in full after applying the scale back to applications in excess of 4.0 times individual investor entitlements. The decision to apply this level of scaleback under the Retail Entitlement Offer was made with the objective of maintaining an orderly aftermarket. The success of this decision can be seen in the recent trading performance of Spark Infrastructure securities.

It is important to Spark Infrastructure that long term securityholders are rewarded and encouraged to remain on the register. It is these investors, be they retail or institutional investors, who will promote stability in the security price and contribute to the long term success of Spark Infrastructure as an investment vehicle.

We know that a number of investors who applied for an allocation far in excess of the 4.0 times entitlement were Nominees acting for sophisticated and professional investors. Based on previous experience and knowledge of the equity market amongst the Spark management team, and consistent with the advice we received, we believe it is likely that allocating these applications in full would have created a significant overhang on the security price.

Our decision to scale back was made acting in the best interests of securityholders, taking into consideration all of the circumstances including our legal obligations together with our desire to treat all securityholders equally and fairly. Spark Management received advice from our professional advisors at the time that the scaleback and method adopted were common and accepted market practice.

I thank you again for taking the time to follow up on this matter.

Best regards, Mario Falchoni

Women on boards update - Carol Schwartz and Oz Minerals

We've never met Carol Schwartz, the highly regarded entrepreneur, professional director and daughter of billionaire Marc Besen, but she gave us a nice pat on the back during this interview with Fairfax journalist Michael Short last week:

Michael Short: 2007, another study. McKinsey found companies with three or more women in top management jobs did better than companies that just had men. So why are shareholders in the face of this evidence not demanding that the people they pay to run their assets – the board of directors and management; these companies are owned by shareholders – why are those shareholders not demanding that these superior corporate outcomes are not being facilitated by having more women?

Carol Schwartz: Well, I think they finally are. Shareholder activists like Stephen Mayne is a phenomenal supporter of introducing women into senior management roles and on boards, and the reason he's done this is exactly for the reasons you state. The proof is there that you get superior financial performance from those organisations that are more inclusive.

Indeed, diversity does deliver better financial results and that's arguably the strongest reason why we need to bust open the blokey directors' club. Oz Minerals was the latest company to relent. We travelled to Adelaide specifically to given the blokes a spray in May and six months later, BP has kindly agreed that its CFO in Australia, Cambridge educated Rebecca McGrath, can join the Oz Minerals board.

We're now down to about 90 ASX200 companies with no female directors and we'll continue putting the heat on until the rest relent relent.

The big bond issues continue under hung parliament as Victoria pushes $30bn debt

It was very strange to hear Reserve Bank governor Glenn Stevens make the following statement during the federal election campaign: "There is virtually no net public debt in the country at all in contrast to much of the developed world."

Whilst Rupert Murdoch's flagship newspaper Down Under, The Australian, loves to beat up on Labor governments irrespective of the facts sometimes, this recent splash pointing out that state government debt is projected to top $240 billion was a worthwhile piece of journalism.

I bumped into former Bendigo Bank managing director Rob Hunt in Bendigo last Wednesday and congratulated him on landing the tough job of chairing Treasury Corporation of Victoria, our state debt management authority.

He was told that debt disclosure by TCV is very poor. The Federal Government's own debt management website puts the gross debt figure at $152 billion and the bond issues continue to come as follows since our last edition:

Wednesday, November 10, 2010:
$500m tender of 12 year bonds expiring in July 2022 were sold for an average yield of 5.43% and was over-subscribed 4.5 times.

Friday, November 5, 2010:
$700m tender of 4 year bonds expiring in October 2014 were sold for an average yield of 5.14% and was over-subscribed 4.2 times.

I also asked Bob Brown a question about debt at the Melbourne Press Club today but he didn't seem too worried that the Brumby Government is borrowing $4 billion a year and state debt is projected to hit $39 billion by 2014 as was explained in this Crikey story last May.

Spend $50 for a season's ticket that helps keeps the directors and pollies honest

The coming weeks will be a very interesting time with the Australian AGM season and the Victorian election but things like contesting the state election and flying to New York to tackle Rupert Murdoch don't come cheap.

Therefore, why not sign up for a $50 AGM season ticket and you will get exclusive email updates on the various battles as 1600 Australian public companies hold their AGMs and the Victorian election unfolds.

Alternatively, email and offer to volunteer to hand out on election day and you'll receive a free subscription.

If you'd like to support robust political and shareholder activism and get an inside look at what should be a fascinating period, click here to purchase your season ticket that will take you through until the end of 2010.

The Cornwall collection

Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing to The Mayne Report since March 2009. Here is a collection of his best cartoons and check out his latest animation:




Support our long term tailor Kumar Advani

The Mayne Report Rich List

BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We began the process of building the list in early 2008 where we had an initial 327 names. Now, after much research, we've got more than 1500 names with those who've fallen back below $10 million italicised. Below are some new entries:

Karidis family:
founder of the largest property development and investment businesses in South Australia, Karidis Corporation, which has interests in retirement living accommodation, car parking, residential and commercial properties. In the past 40 years they built 5,000 structures are estimeted to be worth around $300 million.

Kevin Bamford: part-owner of the 2010 Melbourne Cup winner, Americain, and chairman of Label Makers, Australia's largest label producer.

Michael Smurfit: was a part-owner of Cup winners Vintage Crop and Media Puzzle. Smurfit bought half of Kevin Bamford's Label Makers business in the early 1990s.

David Wee: founder and CEO of Carepoint Industrial Health Services and of Oceanside Securities, WA, he has interests in Abuzz Technologies, Global Mall Media and Property & Hospitals, which pushes his wealth at more than $10 million.

More Cornwall on the banks



Donate to help keep us going

The Mayne Report costs almost $100,000 a year to run so if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click on the image below:

From the press room

Here are a selection of recent media mentions and engagements:


BHP 3rd most valuable company as Liberal bank holdings hit $28m
November 8, 2010


774 ABC Melbourne - short grab from Tony Wilson about winning the Stephen Mayne award.

Click the link below to get the latest radio and AGM audio:

More gems from Mark Cornwall on Packer and Hilary Clinton's visit


Sign up for campaign and governance Tweets

Click on the image above to join more than 2600 followers on Twitter. Here are some of the more recent Tweets since the last edition:

8.48am November 11: Off to Fairfax Media AGM at Crown this morning then a Melbourne Press Club lunch with Bob Brown being held, appropriately, at The Windsor.

9.18pm November 10: The Northern Metro nomination is online here: via web

5.15pm November 10: Safely registered for Northern Metro. Thank you Mr McCrann. Off to more inner city council watchdogging then a nursing home AGM tonight.

2.34pm November 10: Malcolm Fraser just gave an amazingly frank and comprehensive speech on foreign policy at Aussie Institute of International Affairs Victoria.

12.31pm November 10: Attended Computershare AGM this morn plus SP Ausnet results briefing for update on $130m Brunswick Terminal investment related to election.

3.30pm November 9: Just stood up Bruce Guthrie for a coffee opposite MTR in Richmond. Whoops, made grovelling apology.

10.30pm November 8: Back from Hume & Banyule council meetings. Hume mayor Geoff Porter is a good hand who got a nice send-off. They reveal expenses claims too.

4.39pm November 8: Just sent this Vic election pitch with Burnside endorsement to 2700 lawyers:

10.05am November 8: Just rang in to Jon Faine and called for Vic Libs to reveal their $28m worth of Big Bank shares. Running in full detail in Crikey today.

10.03am November 8: Looking for 200 volunteers to man 180 booths for winnable upper house tilt in Victorian election. Email if you can.

4.32pm November 5: Smart move by Ten to appoint a Bruce Gordon lawyer to board in exchange for his 13% stake backing 5 incumbent directors at Dec 9 AGM.

4.21pm November 5: Surging dollar and BHP share price puts the Big Australian up to world's 3rd most valuable company after only Exxon and Apple. Tax them more

7.13pm November 4: Big day in Sydney with Prime Inf and Leighton AGMs, visit to ASA, visit to Sky News. Sen Xenophon is launching state tilt tomorrow morn.

1.45pm November 4: Asked about his decision to be paid in cash rather than shares over a long period at Leighton, Wal King said he was "pretty dopey". Classic

1.33pm November 4: Just out of Leighton AGM. Big farewell for Wal King but once again majority of independent shares voted against remuneration report.

3.27pm November 3: Bendigo Bank AGM at 2pm. On the way on the Calder but will be there by 2.20pm. Should be good meeting. Webcast is here

That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by shareholder activist, local government councillor, Crikey founder and political candidate Stephen Mayne with regular email editions. This email was authorised by Paula Piccinini of 205 William St, Melbourne 3000. To unsubscribe from the free emails click here.