Bills Digest no. 121 2005–06
Australian Broadcasting Corporation Amendment Bill
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Broadcasting Corporation Amendment Bill 2006
introduced: 29 March 2006
Portfolio: Communications, Information Technology and the
Commencement: Schedule 1 commences on the later of: (a) 15
June 2006 (b) the day after Royal Assent
To amend the Australian Broadcasting Corporation Act
1983 (the ABC Act) to remove the position of staff-elected
Director from the Board of the Australian Broadcasting Corporation
The first staff-elected position on the governing body of the
ABC was introduced by the Whitlam Government without legislation in
1975, and subsequently abolished by the Fraser Government. The
current position was created by an amendment to the ABC Act in
Section 12 of the ABC Act requires that the ABC Board consist
(a) the Managing Director;
(b) the staff-elected Director; and
(c) not fewer than 5 nor more than 7 other Directors.
On 24 March 2006 Senator the Hon Helen Coonan, the Minister for
Communications, Information Technology and the Arts
announced that the staff-elected Director position on the ABC
Board would be abolished. The Minister stated that the change would
improve corporate governance:
As the staff-elected Director has been elected by
staff rather than appointed, there have been claims that the
position creates uncertainty about accountability.
However, there is a clear legal requirement on the
staff-elected Director that means he or she has the same rights,
duties and obligations as the other Directors, including to act in
the interests of the ABC as a whole.
The Government is of the view that there should be
no question about the constituency that ABC Directors are
accountable to, Senator Coonan said.
Therefore, to ensure the efficient functioning of
the ABC Board, the staff-elected position will be removed. This
change is in line with modern principles of corporate governance
and will also provide more consistency in governance arrangements
for Australian Government agencies. (2)
The Minister also noted that the Special Broadcasting Service
(SBS) did not have a staff-elected position.
The Explanatory Memorandum provides the following rationale for
The Bill addresses an ongoing tension relating to
the position of staff-elected Director. A potential conflict exists
between the duties of the staff-elected Director under paragraph
23(1)(a) of the Commonwealth Authorities and Companies Act
1997 to act in good faith in the best interests of the ABC,
and the appointment of that Director via election by ABC staff. The
election method creates a risk that a staff elected Director will
be expected by the constituents who elect him or her to place the
interests of staff ahead of the interests of the ABC as a whole
where they are in conflict
The difficulties associated with such a position
were recognised in the June 2003 Review of the Corporate Governance
of Statutory Authorities and Office Holders (the Uhrig Review) at
pages 98 and 99. That Review concluded: The Review does not support
representational appointments to governing boards as
representational appointments can fail to produce independent and
objective views. There is the potential for these appointments to
be primarily concerned with the interests of those they represent,
rather than the success of the entity they are responsible for
governing. The Bill resolves these issues by abolishing the
staff-elected Director position.(3)
The Coalition announced its intention to examine statutory
authorities and office holders in its 2001 election
platform.(4) On 14 November 2002, the Prime Minister the
Hon. John Howard appointed Mr John Uhrig AC to review the
governance practices of statutory authorities and office holders,
particularly those agencies which impact on the business community.
The objective of the review was to identify issues concerning
existing governance arrangements and to provide policy options for
Government to gain the best from statutory authorities and office
holders and their accountability frameworks.(5)
The Prime Minister was provided with the
Review of the Corporate Governance of Statutory Authorities and
Office Holders in June 2003.(6) The Uhrig Report was
released by the Minister for Finance and Administration on 12
The Review concluded that there was no universally agreed
definition of corporate governance and suggested the following
definition: in general terms, corporate governance encompasses the
arrangements by which the powers of those who implement the
strategy and the direction of an organisation are delegated and
limited to ensure the organisation s success, taking into account
the environment in which the organisation is operating.
The Report recommended that two templates be applied to ensure
good governance of statutory authorities: agencies should either be
managed by a Chief Executive Officer (CEO) or by a board structure.
Both templates detail measures for ensuring the boundaries of
responsibilities are better understood and the relationship between
Australian government authorities, Ministers and portfolio
departments are made clear.(8)
Uhrig recommended that the selection of the management template
and financial frameworks to be applied should be based on the
governance characteristics of a statutory
The Financial Management and Accountability Act 1997 (
FMA Act ) should be applied to statutory authorities where it is
appropriate that they be legally and financially part of the
Commonwealth and do not need to own assets. This includes
Budget-funded authorities. The FMA Act imposes some governance
requirements including various management and reporting
responsibilities for the CEO (sections 44 46, 49 and 51), as well
as allowing the Minister to give guidelines to the CEO (s.
64).(10) Furthermore, FMA Act provides an accountability
framework for CEOs to manage agency resources. Uhrig recommended
that these organisations should be governed by a CEO.
The Commonwealth Authorities and Companies Act 1997 (
CAC Act ) should be applied to statutory authorities where it is
appropriate that they be legally and financially separate from the
Commonwealth. The CAC Act also deals with governance issues; for
example, it requires the head of the board to report to the
responsible Minister (sections 15-16), and to ensure that the
authority s activities comply with government policies
(s.28).(11) Uhrig recommended that these organisations
should be governed by a board. The ABC is a Commonwealth Authority
under the CAC Act.
In general, agencies which exclusively manage Commonwealth
appropriations should be represented and governed by a CEO. A board
structure is favoured if there is a strong commercial focus to the
organisation, or if the agency is intergovernmental.
Of relevance here, the Uhrig Report dealt briefly in Chapter 6
with representational appointments. These are appointments in which
a board member represents, for instance, other people, departments,
entities and interests. The review did not consider staff-elected
representation specifically except a brief consideration of
departmental public servants sitting on boards of other government
agencies.(12) The Review did not support
The Review does not support representational
appointments to governing boards as representational appointments
can fail to produce independent and objective views. There is the
potential for these appointments to be primarily concerned with the
interests of those they represent, rather than the success of the
entity they are responsible for governing.(13)
The ABC is a Commonwealth authority for the purposes of the CAC
Act.(14) The ABC is not the only CAC body with a
staff-elected board member. Other Commonwealth statutory
organisations with staff elected positions on their governing
bodies include the Australian National University, the Australian
Institute of Health and Welfare and the Australian Film, Television
and Radio School. Furthermore, many public bodies have a variety of
other kinds of representational appointments including
departmental, industry, interest group, community and regional
Neither the ABC Act nor the CAC Act require, or give the
imprimatur, to staff elected board members to favour the interests
of their constituents. This is, arguably, subject to one minor
exception in subsection 17(1A) of the ABC Act which deals with the
disclosure of interests by board members. It provides:
1A) Where a matter being considered or about
to be considered by the Board relates to the terms and conditions
of employment of employees, or to the terms and conditions on which
a person performs services for the Corporation pursuant to a
contract, section 27F of the Commonwealth Authorities and
Companies Act 1997 does not require the staff‑elected
Director or the deputy of the staff‑elected Director to
disclose an interest that he or she has by reason of being such an
employee or performing services pursuant to the contract.
Whether staff representatives make a practice of prosecuting the
interests of staff is moot but it is clear that the legal
duty of such board members is not to their constituents but to the
organisation more generally. These duties are set out in the ABC
Act and in the CAC Act.
The CAC Act sets out the duties of directors (which in the case
of the ABC, means the Board members(15)) such as
reporting obligations. It also imposes duties on officers generally
(which includes directors.(16)) These include duties of
care and diligence,(17) the duty to act in good
faith,(18) the duty not to misuse the officer s
position(19) and the duty not to misuse
The ABC Act sets out the duties of the Board of the ABC in
Currently, neither the CAC Act nor the ABC Act make a
distinction between the duties of the staff-elected Board member
and the other members of the ABC Board. The statutory duty of a
staff-elected representative is not to the staff, specifically, any
more than it is for the other Board members. Therefore, a
staff-elected board member who places the interests of staff ahead
of the interests of the ABC as a whole could be in breach of their
duties under the legislation as it currently stands.
One the issues examined by the Senate Environment,
Communication, Information and the Arts (ECITA) Committee inquiry
into the Bill was unwillingness of the current staff-elected
director, Ms Ramona Koval, to sign certain ABC protocols. The
1.17 The potential for a lack of independence in
the role of the staff-elected director was apparent in an example
of a staff-elected director not signing the ABC Board Protocol. The
protocol outlines the governance arrangements of the Board,
covering matters such as recognition of rights and responsibilities
of directors and expectations, as well as rights and benefits
accorded to directors.16 The protocol is viewed as important for
the effective operation of the board, particularly in light of
alleged leaks of confidential board information in 2004.
1.18 The staff-elected director defended her
action in not signing the protocol:
It was about independence. It was about having my
decisions and opinions subsumed to the opinions of the rest of the
board so that went to independence, which is an absolute core issue
as far as a director of a corporation is concerned. I did not want
to be in breach of the law, frankly.
1.19 However, this raises concerns about the
ability of staff-elected directors to uphold the interests of the
ABC, and in doing so, acting in a manner that places the interests
of the ABC above those of the staff who elected them.
This difference of opinion between the committee majority report
and that of Ms Koval (and the committee minority report) appears to
centre on what constitutes independence in the context of the ABC
board. Ms Koval s submission to the inquiry put her view as
Some media reports have cited my inability to sign
up to ABC Board Protocols as evidence of conflict of interest or
lack of Board functionality.
In October 2002 I informed the Chairman of my
unwillingness to support a number of proposals in the Board
Director s Handbook, a document which is not binding in law and
which serves only as a gentleman s agreement. I assured the
Chairman and the Board that I fully intended to act in accordance
with my legal obligations under the Corporations Law and the ABC
Among other problems, the document attempted to
make the actions of individual directors subject to approval by the
chairman or the majority of the Board. This confusion between
members of Boards of Directors and members of Cabinet is
regrettable, and is contrary to the requirement that Directors act
at all times independently and in good faith...
Generally, there is an expectation that members of
a Board of Directors will act collectively, just as members of
Cabinet are required to do. However, this is subject to the
overriding duty of each individual member of the Board to act in
good faith in the Corporation s best interests. Consequently, it is
not open to a Board majority to enforce its view of good faith and
best interests on any individual member.
An individual director whose opinion
differs from that of the majority should act with discretion in
broadcasting that opinion. However, where important matters of
principle are involved, the director s individual duty to the
Corporation will outweigh his or her collective duty to the Board.
Under corporations law, there is no requirement upon any such
member to resign. Indeed to do so may be to act contrary to the
overriding duty to act in good faith and in the best interests of
the corporation concerned.
The rule concerning Cabinet solidarity has no
application in relation to Corporation directors. Any endeavour by
a Board to impose such a rule is illegitimate.
One version of the document required that I not
participate in public (including media) discussions, interviews or
articles relating to ABC Board matters . This could imply that as a
Director I cannot comment in public on any matter to do with the
ABC at all, as a Board matter is really anything to do with an
The deed acknowledged the right of the Director to
have regard to the interests of ABC staff in his or her
decision-making BUT ONLY to the extent that it does not, in the
opinion of the Board, conflict with the interests of the
Corporation as a whole. This would in principle subjugate my rights
to the control of others, and this was unacceptable.
It is clear that a Director must act bona
fide in the best interests of the Corporation. But that assessment
is a matter for the individual director, and is not determined by
the opinion of other directors. [emphasis added]
Whatever the expectations of those voting for the staff-elected
board member, the duties of such a person are to the organisation
generally just as it is for other Board members. It is worth
noting, therefore, that if there is a concern that staff-elected
board members might prosecute particular interests that must
equally apply to the other Board members who are appointed by the
Government through the Governor-General.
The position of staff-elected Director was not the subject of
any analysis or recommendations in either the Mansfield
review(23) or the Report of the Senate Select Committee
on ABC Management and Operations.(24) The Report of the
Senate Environment, Communications, Information Technology and the
Arts References Committee strongly recommended the retention of the
position.(25) The ANAO Performance Audit on corporate
governance in the ABC did not examine the issue.(26)
In his submission to the Senate inquiry into this Bill (see
below), Professor Stephen Bartos, Director of the National
Institute of Governance and author of Public Sector Governance
Australia ,(27) made several observations about the
reliance placed on the Uhrig Review in justifying these
- While the Uhrig Review did not support representational
appointments to governing boards, it was not specifically concerned
with staff-elected directors.
- The Review dealt only briefly with representational
appointments and, to the extent that it did, was concerned largely
with departmental representatives on boards.
- The comments about representational appointments in the Review
did not form part of the formal recommendations of the report. They
were part of a series of Better Practice observations which are an
interesting and valuable contribution to governance debates, and
would have had more force had the government formally
adopted/amended/rejected the better practice suggestions or
referred them for wider debate .
- However, the views on representational appointments noted in
the Uhrig report represent commonly accepted practice in Australian
Corporate Governance which does not favour such appointments.
- Nevertheless, representational appointments are still common in
the public sector most obviously in the case of rural industry
representative appointments in the Agriculture portfolio. There is
an enormously wide variety of representational appointments,
including departmental, industry, interest group, community,
regional, age-group, staff and other representative categories.
Staff representatives are a minority among these categories, but
not unknown outside the ABC (for example, there are staff
representatives provided for in the governance arrangements for the
Australian Film, Television and Radio School and the Australian
- It is also arguable that departmental representatives on Boards
are in some cases effectively appointed so as to represent the
interests of staff; for example, the ex-officio appointment of
serving members of the Defence force to the Board of the Defence
- Although Anglo-American governance norms tend not to favour
representational appointments, this is not the universal position
in all countries.
- the choice of model to be adopted for a public sector body
should not be static or formulaic, but be driven by the objectives
of the organisation concerned.
- While there are both advantages and disadvantages of
representative board positions, the final decision on an
appropriate governance structure depends on where legislators see
the ABC as situated in the broader map of the broadcasting
industry. As I noted in my interview on the subject, if one sees
the ABC as operating in the same space as other television and
radio stations, having a governance structure like them is probably
rational and reasonable. If you conceive of the ABC as being
somehow some sort of different community-based body, you ll see
having representative directors onboard as being more
Responses to the decision by the current and former
staff-elected representatives were reported by Crikey as follows.
Ramona Koval, the current staff-elected representative, sent
this response to Crikey:
Contrary to the Minister's view, there has never
been uncertainty about the accountability of the staff-elected
director to the ABC Board. I am required to act in the best
interests of the ABC, as are all other directors, and it's a
serious responsibility that I have carried out with passionate
The position of staff-elected director is
important to provide the Board with a working knowledge of the role
and functions of a public broadcaster, and, at times, as a balance
to the practice of party political stacking of the ABC board I have
never breached confidentiality in this role. I have simply raised
concerns about the potential for political interference.
The government's intervention in abolishing this
position while an Australian Electoral Commission election is
underway, reveals the urgency of its desire to control the
Kirsten Garrett, who was a staff representative on the ABC board
from 1996-2000, said the argument that the staff position created
an untenable conflict was unfounded:
This is just red raw politics with an
extraordinary disregard for the Australian people. If it succeeds,
the Government will have complete control of the ABC. The
staff-elected director is already the last independent voice on the
board and the accountability argument is a furphy.
During my time on the board I found that the
staff-elected director position was of great value because of the
knowledge about the ABC and its place in the wider community that
the person holding that position has. Many other directors were
keen to hear the information a staff-elected director could put
before the board. The debates and disagreements merely strengthened
the board's decisions.
Once he or she enters the boardroom, the
staff-elected director is answerable to the charter of the ABC and
the Australian community. You are informed by staff but you are in
fact an executive director of the board and must behave as such,
that is independently. The staff-elected director is accountable in
exactly the same way as other directors.
This is about clearing away any impediment to
further weakening and dismembering the ABC and getting it ready for
commercialisation. The campaign in the media of the last two weeks
shows that the ABC, the media and the community are being softened
up for this assault.
The Bill was referred to the ECITA Committee on 30 March 2006
for consideration. The Committee took 59 written submissions and
heard evidence at a hearing held in Canberra on 13 April 2006.
The Committee reported on 2 May 2006. The majority report
supported the Bill but minority reports by the ALP, the Greens and
the Democrats did not.
The Uhrig Review of governance in public sector agencies did not
support representational appointments to boards. However, it did
not specifically address staff-elected appointments nor did it give
any attention to the ABC. Representational appointments, including
staff-elected representatives continue to exist on the Boards of
other agencies. Nevertheless, as a general proposition, modern
Anglo-American governance theory tends not to support these kinds
Item 2 of Schedule 1 amends section 12 of the
ABC Act to remove the requirement for a staff-elected Director.
Item 11 provides that any person who is the
staff-elected Director shall cease to be a member of the Board upon
the commencement of the item.
Items 1,3,4,5,6,7,8,9 and 10 make amendments
which are consequential upon the removal of the requirement for a
Broadcasting and Television Legislation Amendment Act 1986
- Minister for Comunications, Information Technology and the
Arts, Media Release, Restructure of ABC Board (24 March 2006). See
- Explanatory Memorandum, p. 1.
- R. Grant, The Uhrig Review and the future of statutory
authorities , Research Note no 50, Parliamentary Library,
Canberra, 2004-05, p. 2.
- J. Uhrig, Review of the corporate governance of statutory
authorities and office holders, June 2003 Commonwealth of
- J. Uhrig, loc. cit.
- ibid., p. 17.
- N. Minchin (Finance Minister), Australian Government Response
to Uhrig Report , Media Release 57/04, 12 August 2004, http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=550
- ibid, p. 12, point 6.
- R. Grant, loc. cit.
- Uhrig, op cit. p. 99.
- Uhrig, op cit. p. 98.
- Commonwealth Authorities and Companies Act, section 5;
definition of director
- Commonwealth Authorities and Companies Act, section 5;
definition of officer
- Commonwealth Authorities and Companies Act, section 22.
- Commonwealth Authorities and Companies Act, section 23.
- Commonwealth Authorities and Companies Act, section 24.
- Commonwealth Authorities and Companies Act, section 25.
- Australian Broadcasting Corporation Act 1983, section 8.
- Ramona Koval,
Submission 43, Inquiry into Australian Broadcasting Corporation
Amendment Bill 2006, Senate Environment, Communications and
Information Technology Legislation Committee,
10 April 2006, pp. 3 4.
- Bob Mansfield, The challenge of a better ABC (January
- Report of the Senate Select Committee on ABC Management and
Operations, Our ABC (March 1995).
- Report of the Senate Environment, Communications, Information
Technology and the Arts References Committee,
Above Board? Methods of appointment to the ABC Board
(September 2001), paras.2.63-2.66.
- ANAO Performance Audit, Corporate Governance in the
Australian Broadcasting Corporation (Audit Report No.40,
- Stephen Bartos, Public Sector Governance - Australia, CCH. See
- Professor Stephen Bartos,
Submission 2, Inquiry into Australian Broadcasting Corporation
Amendment Bill 2006, Senate Environment, Communications and
Information Technology Legislation Committee,
April 2004 [sic].
Economics, Commerce and Industrial Relations Section
Social Policy Section
Politics & Public Administration Section
8 May 2006
Bills Digest Service
Information and Research Services
This paper has been prepared to support the work of the
Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Information and Research Service, nor do they constitute
professional legal opinion.
IRS staff are available to discuss the paper's
contents with Senators and Members and their staff but not with
members of the public.
© Commonwealth of Australia 2006
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by members
of the Australian Parliament in the course of their official
Published by the Parliamentary Library, 2006.
Back to top