The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 27/09/06

Doorstop Interview
Cabrini Hospital, Melbourne

Wednesday, 27 September 2006

11 am

 

SUBJECTS: Fall prevention programme launch, Final Budget Outcome, Telstra

TREASURER:

Let me congratulate Medibank Private for this initiative to fund a new programme here at Cabrini Health which will aim to reduce the incidence of falls particularly in older Australians, which will implement best practice guidelines and attend to something that not only affects health outcomes but in many cases affects peoples lives. And I think this is a wonderful initiative, I am very pleased to be here to support it particularly because Cabrini Hospital is such a great institution and it is in my local electorate.

JOURNALIST:

Okay, the end of year financial result is expected to be announced any day, if it is a good one, what will the Government’s spending priorities be?

TREASURER:

Well, the Final Budget Outcome will be announced this week on Friday. And it will be the outcome of the financial year for 2005-2006, the year that has just finished. As you know we have been budgeting for a surplus, we have been aiming to produce a surplus because that is important to lay down funding for the future, for the expenses that we will have to meet and also it is consistent with good economic policy. So we will be releasing that outcome on Friday.

JOURNALIST:

If it is a good figure will there be more spending on water and drought?

TREASURER:

No, it is the outcome of last financial year. It doesn’t affect anything that we are doing in the current or in future financial years.

JOURNALIST:

Mr Costello, what do you have to say about Margaret Whitlam’s comments today?

TREASURER:

Look I don’t think it does anybody any good for former wives of Prime Ministers, or wives of former Prime Ministers I should say, to comment on wives of serving Prime Ministers. People have their own views of course but I don’t think it is edifying to the public to have criticisms being published, I don’t think that adds to public debate and I just think it is better if we leave that kind of thing aside because I don’t think it help public debate or public of public policy in any way at all actually.

JOURNALIST:

You have said as majority stakeholder the Government can’t oppose Sol Trujillo’s salary package but it can oppose the entire salary structure for Telstra’s senior executives, is that an option you would consider?

TREASURER:

No what the law requires is for a company is required to put to an Annual General Meeting the remuneration policy that covers its top executives. And where they are on bonus payments the company has to explain to the Annual General Meeting what performance hurdles it set, how it has assessed those performance hurdles and how the person concerned has met them. Now, quite frequently what companies do, is they have a bonus for a chief executive who outperforms the market. They have a bonus just for an increasing share price because in Australia’s strong economy nearly every company increases its share price. And normally what they do is they have a bonus if you increase the share price more than the market average, if you out perform the market. Now that is obviously not the performance criteria that has been put in place by Telstra, so Telstra will have to explain to its Annual Meeting what performance hurdles they put together, how they would assess them and how the bonus has actually been paid.

JOURNALIST:

Are Telstra executives being paid too much?

TREASURER:

Well, the important thing I think is for the company to explain to the shareholders, to the Annual Meeting, what the performance hurdles are, how they assess them and how they were met. Until we actually know that we don’t know why the bonus has been paid in the sum that it has.

JOURNALIST:

Does Donald McGauchie still enjoy the Government’s confidence given he sits on both the Telstra and James Hardie boards?

TREASURER:

Yes, Donald McGauchie is the Chairman of the company and Donald enjoys the confidence of the Government, he has an important role to perform in relation to offering, the further offering of Telstra equity and it is important that he and the executives and all of the people associated with the company are able to explain their policies, they are able to explain where the company is going and they are able to explain the investment.

JOURNALIST:

Do you regard Geoff Cousins as a potential spy on the Telstra Board?

TREASURER:

No, if Mr Cousins is elected to the Telstra Board his obligation will be the same as every other director’s obligation. They have an obligation to perform in the best interests of the company, that is the shareholders. Mr Cousins won’t be working for anybody else expect the shareholders and neither will any other director. That is the law and that law would find Mr Cousins, every other director to act in the best interests of the company.

JOURNALIST:

(inaudible) Mr Trujillo was paid would you like to?

TREASURER:

Well, I think the important thing is Telstra explains the performance hurdles that have been set, how they assess them and how they believe Mr Trujillo has met them. And once that information is available hopefully that will explain the matter. Okay, thanks.