Chapter 2


Chapter 2

Merit-based appointment of directors

2.1        In his second reading speech on the bill, the Minister for Infrastructure and Transport, the Hon Anthony Albanese MP, explained that the existing process of appointments being made by the Governor-General on the recommendation of the government:

...has raised concerns about ABC and SBS board appointments being politically motivated. Commentators have also perceived that political appointments may have diminished the level of expertise of particular board members on complex technological and financial issues facing the national broadcasters.[1]

2.2        The Minister explained that in order to address the lack of transparency in ABC and SBS board appointments:

...the government has developed a new appointment process whereby an independent panel will conduct a merit-based selection process for non-executive directors to the ABC and SBS boards and advise the government on suitable appointments.[2]

2.3        The issue of the politicisation of the ABC board, in particular, has been the subject of a range of media commentary, books and reports,[3] including two previous Senate committee inquiries.[4] Submitters and witnesses to this inquiry discussed the importance of ensuring that the ABC and SBS remain independent and free from political influence, and generally agreed that the merit‑based selection process proposed by the bill would assist in promoting these aims.[5]

2.4        This section of the report draws on the evidence presented to the inquiry to:

  • briefly outline the importance of public broadcasters remaining independent and free from political interference;
  • discuss the contribution that a merit-based appointment process will make to ensuring the independence of the ABC and SBS; and
  • critically analyse the merit-based selection process proposed in the bill.

Independence of public broadcasters

2.5        As noted above, there have been a range of reports and inquiries into public broadcasting in Australia which have discussed the importance of public broadcasters being independent and free from political interference. The committee does not propose repeating the discussion canvassed in those previous reports regarding the importance of the independence of the ABC and SBS. It is sufficient to note that it is widely acknowledged that:

An independent, adequately funded and politically unbiased national broadcaster is one of the most important means by which public debate and discussion can take place in Australia without fear or favour.[6]

2.6        Concerns about the effect of political appointments to the boards of the public broadcasters go back to the mid 1990s,[7] and have been well-canvassed in previous reports and discussions.[8] Evidence to this inquiry suggested that these concerns have not diminished despite both sides of politics having been criticised for making politically-motivated appointments:

I think it is pretty outrageous how over the past couple of decades both parties have indulged their patronage with the ABC. I think it is a tribute to the institution that it has survived, and it is probably due to its public support. It really has, historically, been a political football, and that is what you see.[9]

2.7        Mr Quentin Dempster, former staff-elected director of the ABC Board, discussed a number of instances in which political appointments to the ABC Board have jeopardised the independence of the ABC:

As chairman of the ABC, Donald [McDonald] inappropriately introduced [former Prime Minister] John Howard at a Liberal Party fundraiser during one election campaign. His behaviour was roundly attacked by editorial writers at the time, but at no time did he concede that his duties to the ABC and his then custodianship of its editorial policies were of higher importance than his friendship with John Howard.[10]

2.8        Mr Dempster discussed the 'intense political contention surrounding the appointment of Jonathan Shier as Managing Director by the McDonald board in 2000' arguing that this was another example of politicisation, as Mr Shier was a former Liberal Party official.[11] According to Mr Dempster, Mr Shier made a number of politically-motivated decisions, including:

  • asking 'Max Uechtritz, the then director of ABC news and current affairs, to act to secure [Kerry] O’Brien’s removal [as presenter of The 7.30 Report]'; and
  • cancelling Media Watch 'in spite of its record as one of the most influential and watched programs on ABC television'. Mr Dempster explained that 'Media Watch had exposed a ‘cash for comment’ culture within commercial radio in Australia which enraged those exposed. The then Media Watch presenter, Paul Barry, was contractually terminated'.[12]

2.9        Mr Dempster noted that similar issues arose under the leadership of Mr David Hill, who was Managing Director between 1987 and 1995, during the Hawke-Keating years. Mr Dempster gave evidence that:

Hill was known as [former NSW Premier, Neville] 'Wran's man' at the ABC...

...under pressure from Bob Hawke and Gulf War I, David Hill was going to sack Geraldine Doogue as the presenter of The 7.30 Report...It was almost that David was going to scapegoat Geraldine because she was seen to be an impediment to the ABC's then coverage of Gulf War I, which was controversialised at the time.[13]

2.10      In 2006, the ABC Board, chaired by Mr Donald McDonald AC, decided to cancel the publication of Chris Masters' biography of high profile broadcaster, Alan Jones, despite the book having been commissioned by ABC Books. Mr Dempster commented:

If ever there was a test of the ABC’s independence as a publisher, this was it. We had a work by one of our finest investigative journalists about the way power operates in our country and the operation of Alan Jones’s own network of influence, otherwise known as ‘pick and stick’...Another publisher took up the manuscript, and the work, Jonestown, was published to critical acclaim, winning a Walkley non-fiction award.[14]

2.11      In January 2009, ABC Books announced a commercial partnership with HarperCollins Publishers, a subsidiary of global media company News Corporation. Mr Dempster argued that this arrangement means that:

...it remains doubtful whether the ABC will ever publish any penetrating works which go to the core of the power structures in our country—certainly nothing about News Corp and its use of offshore tax havens such as the Netherlands Antilles, Bermuda, the Cayman Islands and what have you in its financial affairs. This will not be published in book form. The board allowed our independence as a publisher to be compromised through this decision alone.[15]

2.12      Mr Dempster added:

When I was on the board we had editorial after editorial attacking the ABC for going into bed with Fairfax and Cox Communications in a pay TV operation—and rightly so, because we are meant to be independent.[16]

2.13      The committee notes that the ABC and SBS each have special roles in Australian broadcasting, which are reflected in their respective legislation, charters and values.

2.14      The ABC's Charter, which is entrenched in legislation, specifically states that in providing broadcasting services, the ABC shall take account of its 'responsibility...as the provider of an independent national broadcasting service to provide a balance between broadcasting programs of wide appeal and specialized broadcasting programs'.[17] The ABC Act also provides that it is the duty of the board 'to maintain the independence and integrity of the ABC'.[18]

2.15      Similarly, the SBS Board has as its first-listed duty to 'maintain the independence and integrity of the SBS',[19] and the 'SBS Purpose and Values' specify that that the SBS will achieve its purpose of being a pioneering broadcaster by being 'independent from external pressures to conform or favour', and acting 'independently, distinctively and courageously'.[20]

2.16      In his evidence to the committee Mr Dempster explained that:

We need an ABC which is fearless, not fearful. We need an ABC board, management and editorial leadership which treat the charter as a duty of intellectually honest and independent effort which does not allow itself to become a part of the adversarial game of Australian politics. The taxpayers who pay for the ABC do not deserve to be treated as part of so-called culture or political wars of influence peddling between the Labor and Liberal parties or the sectional interests which bankroll them.[21]

Committee comment

2.17      The committee strongly endorses Mr Dempster's comments and considers that they apply equally to the SBS. The committee has particular concerns about the effect of the partnership between ABC Books and HarperCollins and urges the ABC Board to review whether the arrangement maintains the necessary independence of ABC Books and the ABC as a whole.

Recommendation 1

2.18      The committee recommends that the ABC Board review whether the partnership between ABC Books and HarperCollins maintains the necessary independence of ABC Books and the ABC as a whole.

2.19      It is clear, from Mr Dempster's evidence as well as that provided by the Friends of the ABC,[22] that the past practice of appointing directors to ABC and SBS boards has contributed to their politicisation.

2.20      Under the existing legislative frameworks, directors of the ABC and SBS Boards are currently appointed by the Governor-General on the recommendation of the government.[23] Both acts specify that a person shall not be appointed unless they have specified relevant experience.[24] However there are currently no legislated transparency or accountability mechanisms within the appointment process to ensure that directors do possess the requisite experience, or are the best possible candidates.

2.21      The committee questioned Mr Donald McDonald AC, former Chair of the ABC Board from 1996 until 2006, about the method through which he was appointed. Mr McDonald informed the committee that his appointment:

...probably took place like all the other appointments in that time: somebody rang me up and asked me whether I would do it.[25]

2.22      Mr McDonald went on to say that in his case it was the minister who had phoned him directly and offered the position.[26] Mr McDonald also confirmed that he and the minister were personally acquainted.[27]

2.23      Mr Dempster reminded the committee that 'Donald [McDonald] is a close personal friend of John Howard, the former Prime Minister'.[28]

2.24      Although there can be no doubt that, based on his considerable experience in the administration of the Sydney Theatre Company, Musica Viva and the Australian Opera Company,[29] Mr McDonald was suitably qualified for the position, he himself acknowledged that there were no checks and balances involved in appointing him to the position.[30]

Committee comment

2.25      While the committee does not doubt that Mr McDonald was a suitably qualified and effective Chair of the ABC, the committee is of the strong opinion that the appointment of directors to the boards of our public broadcasting organisations by virtue of their connections with government ministers is completely inappropriate. It undermines the independence of the board and accordingly that of the whole of the organisation. The committee agrees with the comment of Ms Glenys Stradijot, Campaign Manager/Executive Officer, Friends of the ABC, that:

The independence of the ABC board is also important in terms of its job of protecting the ABC. The board needs to be independent of the government so that it can stand up for the interests of the ABC on occasions when governments are seeking to undermine the ABC or to interfere in its independence. There needs to be a board that can stand up to get the best funding for the ABC for its future. So the independence of the entire ABC depends on the independence of the board.[31]

2.26      Accordingly, the committee urges government and the ABC and SBS Boards to ensure that the interventionist approach that led to the politicisation of the boards of those public broadcasters and undermined their independence is not permitted to occur again, in order to maintain the independence of public broadcasters in Australia.

Recommendation 2

2.27             In order to protect the independence of Australia's public broadcasters, the committee urges the government and the ABC and SBS boards to ensure that the interventionist approach by government, which has resulted in the politicisation of public broadcasters, does not occur again.

Merit-based appointment of board directors

2.28      The majority of the organisations and individuals who contributed to this inquiry expressed the view that a merit-based appointment process for directors of the ABC and SBS boards would go a long way towards addressing the politicisation of both organisations that has occurred in the past.[32]

2.29      For example, in its submission, Friends of the ABC (NSW) stated:

The more open process envisaged by this Bill will go a long way towards restoring confidence in the ABC Board.[33]

2.30      Similarly, the Community and Public Sector Union (CPSU) expressed the view that:

Merit based appointments will increase the calibre of boards, widen the scope of the talent pool available to fill the positions and will help build public confidence in the institutions that have been tarnished by the stacking of the boards by both sides of politics.[34]

2.31      Mr Dempster further argued that:

Public broadcasters and, I believe, the wider public are looking to the current parliament to stop the practice of board stacking and adversarial and ideological influence peddling which sometimes goes with ABC board appointments. We need a paradigm shift, and the amendment before the parliament facilitates that. We need a new institutional maturity.[35]

2.32      An administrative merit-based appointment process for appointments to the ABC and SBS boards has been in place since 2008, with appointments having been made in March 2009 and June 2010.[36] The bill proposes to legislate this existing process. Mr Dempster made the point that this process has 'been completely noncontroversial', and that as a result:

We have to go back into the record books and remind ourselves of the unpleasantness which has resulted in us coming back to this issue.[37]

2.33      Mr McDonald was the only person who provided evidence against the proposal, on essentially philosophical grounds as opposed to the practical effect of merit-based selection on the ABC and SBS boards:

I think it is completely unnecessary. It is a whole other layer of bureaucracy when the public have elected politicians, and therefore elected the government to make decisions and run things. Apparently, the government is good enough to decide when we go to war; it is good enough to appoint members of the High Court—it is good enough to do all sorts of things—but apparently it is not good enough to appoint the members of the ABC board. It is ridiculous.[38]

Committee comment

2.34      The committee agrees with the vast majority of contributors to this inquiry, and notes that there is overwhelming evidence in support of merit‑based appointments to the boards of public broadcasters. The committee believes that a transparent merit‑based process of appointing directors has since 2009, and will continue to, increase the independence of the ABC and SBS boards, which in turn will improve the capacity of the ABC and SBS to provide high-quality, independent broadcasting services to the Australian public.

2.35      Furthermore, the committee considers that processes to improve the independence of the ABC and SBS boards will increase the capacity of both organisations to withstand political attacks, which have frequently occurred in the course of Senate Estimates processes.[39]

The merit-based process proposed by the bill

2.36      An influential report by the United Kingdom's Committee on Standards in Public Life, chaired by Lord Nolan, and entitled Standards in Public Life, made a series of recommendations on how the public appointments process in general might be improved.[40] Seven principles underpinning the public appointments process in the UK were derived from the report, and are referred to as the 'Nolan rules'. The Nolan rules have become widely regarded as a best-practice approach to public appointments under a Westminster system of government.[41]

2.37      The Nolan rules recommend that the following elements underpin a public appointment process:

  • ministerial responsibility;
  • merit;
  • independent scrutiny;
  • equal opportunities;
  • probity;
  • openness and transparency; and
  • proportionality.[42]

2.38      The CPSU, Friends of the ABC (NSW) and officers from the Department of Broadband, Communications and the Digital Economy each gave evidence about the ways in which the proposed selection process fulfils the Nolan rules.

Ministerial responsibility

2.39      The proposed model retains a level of discretion for the Minister and Prime Minister in the appointment process by allowing them to recommend the appointment of a person not nominated by the nomination panel, subject to certain conditions.[43] Friends of the ABC (NSW) submitted:

We note that this process follows the Westminster conventions on ministerial responsibility, with the Minister retaining the power to reject the recommendations of the selection committee and appoint someone else. This is balanced, to some degree, by the fact that the Minister would be obliged to make the reasons for his decision public.[44]

2.40      Dr Simon Pelling, First Assistant Secretary, Broadcasting and Switchover, Department of Broadband, Communications and the Digital Economy, expanded on this point:

With regard to ministerial responsibility, ultimate responsibility for appointments is with ministers. That is provided for in our provision. The nomination panel makes recommendations to the minister or, in the case of the ABC chair, the Prime Minister, but there is still capacity for the minister in particular circumstances to come up with somebody.[45]

2.41      This aspect of the proposed model accords with the view of the Nolan committee that:

Accountability to Parliament is an important constitutional principle which we have no wish to weaken. We recommend that ultimate responsibility for appointments should remain with Ministers.[46]

Merit

2.42      The Nolan report recommended that all public appointments 'should be governed by the overriding principle of appointment on merit'.[47] Dr Pelling advised the committee that merit 'is what the whole process is fundamentally about'.[48]

2.43      A number of witnesses and submitters questioned the fact that the bill specifically precludes former Federal and State politicians and senior political staff members from appointment.[49] The Explanatory Memorandum explains the scope of  'senior political staff members':

It is anticipated that the legislative instrument that specifies classes of senior political staff member would include positions such as a Chief of Staff, Special Adviser, Principal Adviser, Senior Adviser, Media Adviser and Adviser.[50]

2.44      According to the Explanatory Memorandum, this provision is 'intended to strengthen the independence and impartiality of the ABC (and SBS) board[s]'.[51] In support of the provision, Friends of the ABC (NSW) submitted:

The proposal to exclude from eligibility for appointment to the ABC Board former parliamentarians or people who have recently been "senior political staff members" is also likely to lead to greater public confidence in the ABC Board.[52]

2.45      However, a number of witnesses argued that the proposed exclusion of former politicians and senior political staffers undermines the merit principle and precludes an experienced and qualified class of persons from appointment. For example, Mr McDonald argued that:

I think it is an extraordinary provision, frankly, to suggest that somebody, having served the public as a member of parliament, is, as a result of that, contaminated to the extent that they cannot provide useful service to the public by being on the board of the ABC. I think that is not only extraordinary but profoundly offensive in retrospect to former politicians who have been on the ABC board.[53]

2.46      The CPSU agreed:

We actually believe that many people drawn to public life from all sides of parliament do want to make a contribution. We think that there is a degree of self-loathing in the proposed legislation, and our concern is not about...whether people are ex-politicians or ex-staffers; our concern is with the notion of political appointments, and they are different things.[54]

Committee comment

2.47      The committee is persuaded by the arguments put forward by Mr McDonald and the CPSU, and does not see any reason why, after a suitable period of time and provided they are found to be the most suitable candidate under a competitive, merit‑based process, former politicians and political staff members ought not be eligible for appointment to the boards of public broadcasters. The committee notes the submission by the Merit Protection Commissioner that 'merit is basically about getting the best available person for the job and doing it a way that is equitable, open and transparent',[55] and does not see how excluding an entire category of people serves the interests of 'getting the best available person for the job'.

2.48      In the committee's view, a waiting period before former politicians and senior staffers become eligible for public appointment would be appropriate. This would be consistent with other Commonwealth government policies and laws, such as the Lobbying Code of Conduct, which does not preclude former parliamentarians from lobbying activities. Instead, the Code provides that former Ministers and Parliamentary Secretaries may not engage in lobbying activities relating to any matter that they had official dealings within 18 months of leaving office.[56]

Recommendation 3

2.49      The committee recommends that the bill be amended to provide that a former politician or senior political staff member is eligible for appointment to the ABC and SBS boards provided that they meet the following conditions:

  • the individual ceased to hold office at least 18 months prior to the appointment; and
  • the individual is nominated by the Nomination Panel following an independent, merit-based selection process as set out by the bill.

Independent scrutiny

2.50      The Nolan report emphasised the importance of independent scrutiny and advice in public appointments processes, finding that:

Public confidence would be enhanced if such advice [to the minister with respect to public appointments] included independent assurance that any proposed appointees had been scrutinised and found to be suitable for the post.[57]

2.51      Dr Pelling advised the committee that the proposed process for ABC and SBS board appointments complies with this principle because:

With regard to independent scrutiny in the Nolan rules, no appointment will take place without first being scrutinised by an independent panel or by a group including membership independent of the department filling the post. Essentially the process of our appointment panel, including members who are selected by the secretary of the Prime Minister’s department, provides an independent scrutiny process which is separate from the department and from the minister in terms of identifying expert candidates for the post.[58]

2.52      A number of submitters and witnesses questioned the independence of the nomination panel which, as described above, the bill provides is to be appointed by the Secretary of the Department of the Prime Minister and Cabinet.[59]

2.53      Friends of the ABC (NSW, Qld, Tas, Vic & WA) submitted:

With the independence of members of the Nomination Panel being critical to the integrity of the new appointment process and public confidence in it, integrity and transparency in the criteria and process for selection of the Nomination Panel is important. FABC believes that the Bill should specify criteria for selection of the Nomination Panel and provide further detail on the process for selection.[60]

2.54      Similarly, Dr Kristin van Barneveld, Deputy National Secretary, CPSU, argued:

We think that public confidence would be enhanced by having a more open system that provides guidance on how the selectors are chosen.[61]

2.55      Dr van Barneveld suggested that the Prime Minister and opposition leader should make decisions about the composition of the nomination panel.[62] However, Ms Stradijot, from Friends of the ABC, warned that this approach risks the appointment of 'lowest common denominator' appointees.[63] Although in making this argument Ms Stradijot was referring to the appointment of board members, the committee considers that the same argument applies to the selection of the nomination panel.

2.56      Dr Wendy Southern, Acting Deputy Secretary, Governance, Department of the Prime Minister and Cabinet, assured the committee that over the past two years during which an administrative merit-based appointment process has been in operation, very experienced and qualified individuals have been appointed to the selection panel.[64] In response to a question on notice the Department of Broadband, Communications and the Digital Economy acknowledged that there are no selection criteria prescribed in the Bill to guide the appointment of members to the Nomination Panel. Instead the department indicated:

In making appointments to the Panel, the Secretary of the Department of the Prime Minister and Cabinet takes account of the ability of potential Panel members to conduct a merit based appointment process.  In making appointments to the Nomination Panel, the Secretary has taken the following into consideration:

  • The candidate’s experience on boards and in large organisations;
  • The candidate’s understanding of corporate governance; and
  • An appropriate representation by gender and States.

In making appointments, the Secretary sought to select people who had this range of experience, who would be respected by both sides of politics, and together would have the widest possible understanding of aspects of Australian life and culture.[65]

Committee comment

2.57      While the committee does not question the independence or quality of the individuals currently on the nomination panel, the committee shares the concerns expressed by the CPSU and Friends of the ABC regarding the need for assurance that the nomination panel is itself independent and free from political influence.

2.58      However, the committee is also cognisant of the fact that it is possible to over‑bureaucratise a merit-based appointment process in pursuing the aim of independence. For example, it would be ridiculous if members of the nomination panel themselves needed to appointed through a merit-based selection process, because there would be no logical end to a chain of merit-based selection processes. In the committee's view, an appropriate method of ensuring the integrity of the nomination panel would be for the panel to include, or be advised by, the Merit Protection Commissioner.

2.59      The Merit Protection Commissioner currently has an active role in ensuring that selection processes for agency heads and APS statutory office holders is merit‑based under the government's merit and transparency policy relating to those positions.[66] The role involves the Commissioner, or her representative, being a full member of the assessment panel for these positions.[67] The Merit and Transparency policy states that:

The primary role of the Commissioner [in the selection processes for agency heads and APS statutory office holders] is to ensure that assessment of candidates is based on merit. The Commissioner (or his or her representative) is in all respects a full member of the assessment panel and therefore plays an active role in the process. He or she needs to be involved in all aspects of the selection exercise including shortlisting of applicants...[68]

2.60      The policy does not apply to the ABC or SBS, however the Merit Protection Commissioner submitted:

Given the level of consistency between the expectations on the SES and Boards in general, the relevance of the APS approaches to merit and transparency in engaging and promoting its senior staff appear to be substantiated.[69]

2.61      The committee considers that, to ensure that assessment of candidates is based on merit, the Merit Protection Commissioner should be a member of the nomination panel for the ABC and SBS Boards to mirror his or her involvement in the appointment of APS heads and statutory office holders.

2.62      Accordingly, the committee recommends that the Merit Protection Commissioner have a standing appointment to the ABC and SBS board nomination panel.

Recommendation 4

2.63      The committee recommends that the government include the Merit Protection Commissioner as a permanent member of the Nomination Panel for appointments to the ABC and SBS boards.

Equal opportunities

2.64      The Nolan report recommended that 'the boards of public bodies should contain a balance of relevant skills, interests and backgrounds'.[70] In this regard Dr Pelling informed the committee that:

The principles of equal opportunity are taken into account in the selection process. Indeed, you would be aware that the SBS board is part of this process and quite specifically the selection panel looks at particular skills needed for people on the SBS board, given the statutory role of SBS.[71]

Probity

2.65      The Nolan report emphasised the importance of public boards observing the 'highest standards of impartiality, integrity and objectivity' and displaying a 'sense of the values and behaviour appropriate to the public sector'.[72]

2.66      Dr Pelling advised that:

With regard to probity, board members of public bodies must be committed to the principles and values of public service. That kind of thing is taken into account in our criteria but our particular criteria do not specifically deal with that. Essentially, members of the ABC and SBS boards are, where there is some guidance in their legislation, subject to the standard principles applying to directors in the Commonwealth Authorities and Companies Act. Those set out a basic set of rules about integrity of their service.[73]

Openness and transparency

2.67      The Nolan report made a number of recommendations relating to the importance of openness and transparency in the appointment process for directors of public boards. The proposed process takes these principles into account by the requirements that:

  • positions be advertised;[74] and
  • the Minister or Prime Minister table reasons for appointing a person not nominated by the Nomination Panel.[75]

2.68      Dr Pelling explained:

With regard to openness and transparency, the process is a public process. Anyone can apply. The independent panel assesses the applications and makes recommendations to the minister.[76]

Proportionality

2.69      The final Nolan rule of proportionality means that appointment procedures ought to be appropriate 'for the nature of the post and the size and weight of its responsibilities'.[77]

2.70      Dr Pelling explained:

I think the reference to proportionality is basically saying that you should not spend huge amounts of effort for relatively minor appointments and hardly any effort on relatively large appointments. Basically our process is about the heads of two substantial broadcasting organisations, and the process is proportionate to the requirements of those boards and has been successful in achieving its objectives to date.[78]

2.71      Dr Pelling elaborated on the most recent appointment processes:

If you look at the last two appointment processes, we have had two separate processes, in 2008–2009 and in 2009–2010. The first appointment process cost $207,992 and the second appointment process cost $112,115...

If there were four appointments in the first and two appointments in the second, that suggests that the cost per appointment is of the order of $50,000 to $60,000...[79]

Committee comment

2.72      Based on the evidence provided by the Department of Broadcasting, Communications and the Digital Economy, the CPSU and Friends of the ABC, the committee is satisfied that, subject to Recommendations 3 and 4, the appointment process proposed by the bill complies with the principles underpinning the Nolan rules and is an appropriate way of ensuring ABC and SBS board directors are appointed on the basis of merit.

2.73      Appendix 3 contains suggested amendments to the bill to reflect recommendations 3 and 4.

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