Keating on tollroads, James Hardie death, ABC ratings, power sales and Packer
July 16, 2008
Here are Stephen Mayne's six stories from the Crikey edition on Wednesday, 22 February, 2006.
6. The day Keating warned of the tollroad fiascos
By Stephen Mayne
State governments of both persuasions in Victoria and NSW now have egg all over their faces over various disastrous toll-road deals, but the man who helped trigger the boom with infrastructure bonds in the early 1990s was warning about looming problems four years ago. In a speech back in September 2002 to the IRF and ARF Asia Pacific Roads Conference, former Prime Minister Paul Keating said the following:
Our priority has to be an efficient and competitive economy, but that is not necessarily the same thing as simply moving public sector monopolies to the private sector.A man ahead of his time! If only Keating's great mate Bob Carr had listened rather than do a pile of deals that lined the pockets of his current employer, Macquarie Bank.
Tunnels and motorways are currently being designed to minimise the financial risk to private investors. They are not being designed for optimal transport or flow efficiency. The traffic flow, route choices and mode of construction inherent in these undertakings are, I believe, seriously compromising traffic flow, road amenity and community standards as to construction and design.
Not one of these projects does not lead to incongruous road closures and traffic pressure designed to funnel traffic through projects in ways that minimise risk to investors. Road and traffic authorities became caught up in the developers' and financiers' schemes; indeed they are too often conscripted as the lead agents or surrogate promoters of the schemes. Once a developer and a financier have a road and traffic authority on the hook, that authority becomes their Trojan horse into government.
In the long run the public and the transport operators pay the price for these compromises. And of course the major compromise is price. The operating costs of these projects are driven up by the fact that it is not the Commonwealth or the State financing them. Developers, their investors and financiers require somewhere between 200 and 400 basis points of extra financing costs than that which would obtain from Government.
16. Another James Hardie death
By Stephen Mayne
Now this is a tricky situation. The AFR today reports that one of the architects of James Hardie's outrageous attempt to dodge its asbestos liabilities, corporate lawyer Peter Cameron, has died after a brief battle with cancer. Cameron only resigned from the James Hardie board five weeks ago at which point your cynical correspondent produced the following:
James Hardie is another classic example of a company which hasn't exactly been open and transparent in its dealings and the resignation of director Peter Cameron two weeks ago was just the latest example.
Cameron was a partner of Allens Arthur Robinson, the law firm which came up with the disgraceful restructuring designed to dodge asbestos liabilities, and his fingerprints were all over it. The evidence given to the Jackson inquiry in 2004 made his position completely untenable.
Cameron should have been booted off the Hardie board straight away, but instead his fellow directors tolerated his ongoing presence for another 18 months and then he finally resigned on January 19 – "for health reasons" – just a few months before he would have faced re-election.
I called the James Hardie spindoctor James Rickards this morning and asked for some more detail on Cameron's condition, but was abruptly told: "It is not appropriate to comment on a director's health".
Clearly the health reasons were absolutely genuine so apologies for my cynicism but I did at least call the spinner for more detail. There's a macabre irony in all of this because James Hardie products have been the biggest industrial killer Australia has seen in the past 100 years.
Cameron and former James Hardie chairman Alan McGregor were both up to their ears in the cynical restructuring but both were then struck down with cancer within a couple of years.
McGregor chaired James Hardie from 1995 until his resignation on 11 August 11 2004, but on that occasion the company came straight out and said he had lymphoma cancer. He died in February 2005.
A similar situation was the trigger for the biggest bollocking I've ever received over a Crikey item. In March 2003, a Walkley Award winning ABC insider produced an item which said Monica Attard had been moved on when she was a co-host of The World Today. Truth be known she was diagnosed with a serious illness. Don't believe anyone who says the new Media Watch host doesn't have a feisty streak because my teeth are still spinning.
17. ABC Melbourne powers ahead of the pack
By Stephen Mayne, regular on ABC Sydney, Melbourne and Tasmania
The first radio ratings for 2006 were out yesterday and one striking feature was the strong performance of 774 ABC Melbourne compared with Aunty's other local radio stations across the country.
ABC 702 Sydney was the weakest performer with a fall from 3rd place with 9.3 points to eighth place with just 6.9. Virginia Trioli has a challenge ahead of her in the Morning slot after dipping from 6.9 to 5.6 which is below Sally Loane's 2005 low point of 6.5 in survey 7 last year.
In Brisbane, Aunty fell from 8.3 to 6.9 and is now also in lowly eighth place and mornings led the decline with a drop from 8.5 to 5.3.
In Adelaide, ratings fell from 12 to 10.7 as Aunty slipped from 4th to 5th overall and the declines were most pronounced in the morning and evening shifts.
ABC Perth is traditionally the strongest local radio performer but it dropped from 12.6 to 11.6 while retaining second place behind Mix 94.5 but it is only 0.4% ahead of 5th placed and once again, the biggest losses were in mornings and evenings.
Compare all of those slumps with the powerhouse performance by ABC 774 Melbourne which lifted its ratings from 11.7 to second place with 12.4 and is now within range of market leader 3AW which slipped from 13.7 to 12.9. The strength came from entrenched regulars Red Symons, Jon Faine and Derek Guille while newcomers Richard Stubbs and Lindy Burns only suffered marginal declines.
In fact, ABC Melbourne has just achieved close to its biggest cumulative audience ever and the cricket is said to have helped. But then why didn't the cricket help in other cities? Maybe Melbourne really is the most sport-addicted city in the world.
18. More Packer memorial service observations
By Stephen Mayne
Did anyone else notice the presence of the anti-gambling Puritan Archbishop of Sydney, Peter Jensen, in the front row at the Packer memorial service last Friday? Very odd for such a wowser to be present, but maybe it was explained by the involvement of St Andrew's choir. Presumably he didn't sing all the words to The Gambler at the end.
Contrary to our reporting on Monday, Don Burke and David Flint were both at the memorial service. And the absence of John Laws was apparently explained by his broadcasting commitments extending until midday. John Singleton was definitely a no-show, but had sent his apologies several weeks earlier and certainly didn't cover himself in glory looking and sounding like Arthur Daley on that Channel Nine documentary last Thursday.
And did anyone else notice Graham Richardson banished to the back rows with the plebs? He was sitting a couple along from colourful Sydney lawyer and punter Chris Murphy. Interestingly, another politician there on the day was Laurie Brereton, Paul Keating's best friend.
Meanwhile, entertaining Packer family tales continue to arrive at the Crikey bunker. How mean was Sir Frank? Well, the staff once complained of the stuffiness of the old un-airconditioned Park St building with its fixed windows and, come one Monday, staff turn up to discover Sir Frank had employed blokes with sledge hammers to knock holes in the walls. That was the flow-through ventilation.
Another classic tale was the day Arthur Calwell sent in the troops during World War II. Calwell tried to apply wartime censorship to a domestic news item, but The Daily Telegraph didn't like this and, while removing the offending item, left the space blank with "Censored" written across it. Calwell sent in the cops to seize all the copies and several photos show the events – cops with pistols drawn and aimed at drivers' heads! Those were the days.
Keep these tales coming to smayne@crikey.com.au.
26. How Victoria got power privatisation right
By Stephen Mayne, former spindoctor for Victorian Treasurer Alan Stockdale
The proposed merger and then demerger of Alinta and AGL is in large part a squabble over energy assets privatised by the Kennett Government during the spectacular $30 billion sell-off in the 1990s.
While every other state has worried about ownership and control of their energy assets over the years, the Victorians ran a global auction with no strings attached and the state's finances have never looked back.
The contrast with the incompetent and parochial actions of the West Australian Liberal Government are stark indeed, although they must be proud of their baby, AlintaGas, now entering the takeover fray on the east coast.
Richard Court and his then energy minister Colin Barnett decided to sell AlintaGas in 2000 but they were only ever going to allow a cornerstone investor to take 45% because West Australians had to be given a chance to buy a slice of a company that had to be controlled out of Perth.
Wesfarmers, AGL and Kansas-based Aquila made the shortlist and it was the Americans, along with their listed Australian offshoot United Energy and AMP, who won the day with a $319 million bid to take 45%.
This was the equivalent of $4.41 a share, but just a few months later the WA Government floated the other 88 million shares at just $2.25 a pop and 110,000 West Australians shared in the bonanza of a 27% first day stag profit.
Fast forward five years and Alinta shares peaked at more than $12 last October, meaning those West Australians had seen their $198 million investment surge to more than $1 billion. They dipped 23c to $10.74 this morning in light of the $1.2 billion AGL cash splurge but WA taxpayers have still received nothing like full value.
Sure, Melbourne isn't home to many energy company head offices, but who really cares about that when you've fetched $30 billion and the lights stay on? We get full value for our assets and West Australian taxpayers didn't.
You really need to look at Crikey's world famous power sell-off list to keep track of all the deals over the years, but you certainly won't see a takeover bid for Santos any time soon because those short-sighted parochials in Adelaide still have a 15% ownership limit prescribed by the state Parliament which dates back to the days of Alan Bond.
AGL is Australia's oldest listed company but it only lost its 5% shareholder limit a couple of years back. This was imposed to fend off Sir Ron Brierley's takeover plans in the 1980s and Sir Ron remains on the board to his day.
Electricity assets remain largely state-owned in NSW and Queensland, which is why any serious assets shuffling in the industry inevitably comes back to the 15 different privatisations that the Kennett Government drove through between 1994 and 1999.
As NSW Treasurer Michael Costa mulls adding forests to his plans to sell the Snowy, he really should bite the bullet and put the electricity sector on the market because infrastructure prices are booming and there are willing buyers all over the place. Besides, based on Queensland Rail's recent forays interstate, the Beattie Government might also lob a bid or two.
27. Stand by for fireworks at tomorrow's AWB AGM
By Stephen Mayne, small AWB shareholder
Historically, Australian shareholders have had an appalling culture of rarely proposing resolutions of their own to be voted on. Instead, they've tended to accept whatever company resolutions boards have dished up for approval at the annual general meeting.
When a resolution does run into trouble, rarely does it actually get defeated because the company usually withdraws it when the proxies are running badly. AWB last week joined this very small club when it withdrew the resolution proposing a $400,000 pay rise for directors. This is where it fits in the lexicon of defeated or withdrawn resolutions:
Southern Cross Broadcasting: Announced the withdrawal of a resolution to increase retirement benefits for directors at 5.51pm on Friday, October 26, 2001 as you can see here.
John Fairfax: Withdrew a proposed change to its constitution regarding proportional takeovers in 2001 but the losing proxy count was still released here. It was a special resolution requiring 75% approval and Fairfax only had 64.5% of the proxies in favour.
AMP: Withdrew its ludicrously generous and complex incentive schemes proposals for new CEO Andrew Mohl and Henderson CEO Roger Yates before the 2003 AGM after angry shareholders vowed to vote them down given the billions that had just been lost in the UK. Check out the backdown announcement here.
News Corp: I still think the rejection of Rupert's proposed options issue without performance hurdles for six executive directors at the 2003 AGM was the trigger for the move to America. The Sun King said it was Australian institutions that objected and it must have been some sort of "crazy misunderstanding."
Hills Motorway: John Cassidy resigned from the board one day before facing a re-election ballot at the 2004 AGM because it was clear the proxies were running against him. This is the only time in recent history than an endorsed incumbent director has been booted off a board.
Fleetwood Corporation: A proposal to issue options to executive directors was withdrawn at the 2004 AGM due to opposition from shareholders, although the company blamed "the inadvertent omission of some technical information required by the ASX."
AWB: Withdrew resolution proposing a $400,000 increase in maximum board pay to $1.6 million as you can see here.
I'll be heading to tomorrow's AWB AGM in Melbourne as a very recent shareholder but am not expecting any detailed answers. Executive chairman Brendan Stewart will no doubt blame the former management and claim he can't comment until the Cole Inquiry is over. His planned trip to Iraq with Mark Vaile will be an interesting topic given the Canadians have already seemingly cut our lunch.
It will also be amusing to see the spectacle of six farmers running for four board vacancies. Stewart himself is up for election and as chairman of both the remuneration and nomination committees, he is seriously in the gun over the pay rise proposal and the ridiculous monopoly that wheat farmers have over board seats.
Representative boards are difficult to govern at the best of times and AWB runs a ridiculous gerrymander which only allows A class shareholders from the relevant state to vote on each board election. So much for having an accountant, a lawyer, a marketer, a couple of former CEOs and a couple of industry experts which is what most good boards feature.
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