Ziggy's wishlist, defending Kevin Rudd, Fairfax, Burnside defends Mirvac, Is the RACV worth double?
July 28, 2008
Here are Stephen Mayne's five stories from the Crikey edition on Wednesday, 5 October, 2005.
3. Ziggy's digital media reform wishlist
By Stephen Mayne
Former Telstra CEO Ziggy Switkowski resurfaced publicly today for the first time since he was shoved aside to make way for Sol Trujillo on June 30. The nuclear physicist delivered a fascinating speech on media reform to the National Press Club which you can pick up live on ABC Television between 1-2pm if you've got time.
Without a commercial barrow to push, Ziggy is uniquely and independently placed to comment and he opened with an attack on the government's failure to act in the best interest of "the public" by instead allowing the media moguls to try and agree on a set of media law changes.
"While her (Coonan's) proposals were constructive, the qualification that practical progress required media industry consensus meant, to me, that the proposed changes inevitably belonged to a minimalist model anchored by legacy obligations and interests," Ziggy said.
"The main point I want to make here today is that the key policy decision must be to set and enforce an early date for total conversion to digital broadcasting – no later than January, 2009 – and that all other media law changes pivot around that date. I say this because I am convinced that we stand at the threshold of an era of proliferation of content, platforms, services etc that will benefit the Australian community particularly if it is encouraged by light handed regulation within an all digital environment."
Ziggy painted a stark picture of the wrenching changes we've seen over the past decade and laid out what he'd like to see by 2015. As to the present, he pointed out that "nine out of ten Australians own a mobile phone which is rapidly becoming the communications weapon of choice. Emails outnumber phone calls by 10 to 1 and wireless text messages, SMS, are now approaching the volume of local telephone calls and will overtake them shortly."
Rupert Murdoch might think he is infallible but Ziggy doesn't see him or Kerry Packer on the scene in 2015 when he predicts that "every one of today's media companies will be headed by a new generation of leaders."
"These leaders are unlikely to have the authority, power and single-minded focus of today's media moguls, and all will be increasingly subordinate to broader shareholder interests and less able or inclined to use media properties as trophy assets or to assert private agendas."
Ziggy laid out a desire to see a complete free for all with a fourth free-to-air network, no anti-siphoning lists to protect the likes of Kerry Packer, multi-channelling, unlimited foreign investment and government subsidised digital set-top boxes into the home, complete with lucrative spectrum sales for new digital TV licences.
He's not even worried about cross-media restrictions, albeit with a caveat: "providing it is part of a package that permits the issue of new broadcast licences to diversify the range of content and opinion available to Australian consumers."
All up, it is a fascinating and far-sighted contribution from the man the Howard Government hand-picked to run Telstra for seven years. Sadly, the cynicism of politics will probably see bipartisan support for Australia's two richest and most powerful families, the Packers and the Murdochs, as they lean on the government to only produce minimalist changes that maximise their wealth and power – to the detriment of the broader public, as Ziggy so eloquently points out today.
10. In defence of Kevin Rudd
By Stephen Mayne
Mark Latham's selection of Kevin Rudd as his fifth best Labor politician left in Canberra might be more about mischief-making than genuine admiration, but I've got to confess to being a Heavy Kevie fan.
However, the bloke can be as arrogant as all get out. I first met him at the February 1994 COAG meeting in Hobart when he was head of the Wayne Goss cabinet office.
It was getting on towards midnight in the bar of the Sheraton and he was with then NSW director general Roger Wilkins, the current partner of Sydney spindoctor Sue Cato. I'd had a few drinks and lobbed a couple of gentle sledges about the state of the Queensland electricity system, suggesting they should build an interconnector with NSW which had more power stations than it knew what to do with.
After a couple of exchanges I introduced current Herald Sun columnist and then Adelaide Advertiser state political reporter John Ferguson, and Rudd dismissively declared that South Australia was "one great big community service obligation for the rest of Australia."
Ferguson was quite taken aback and apparently ended up going into print with this sledge, albeit without naming Rudd.
That said, Rudd is genuinely smart, works very hard, presents well in the media and has had a life outside ALP machine politics, unlike other leadership aspirants such as Stephen Smith and Wayne Swan. Indeed, Rudd actually has serious experience in government, having been the senior bureaucrat in the Queensland government from 1991-95, and before that was a career diplomat who spent time in Beijing and Stockholm.
No-one gets anywhere in politics without playing some political games and if that meant leaking to Laurie Oakes from time to time then so be it. One Crikey subscriber has made a good point that Rudd was stoically loyal to Latham insofar as he publicly defended the "troops home by Christmas" policy, despite having private reservations.
Latham is right that he would be a far better option for Labor than Beazley, as would Julia Gillard. That said, Latham's endorsement after the various attacks in his diaries is a very interesting and newsworthy development. Will anyone in the mainstream media be big enough to actually report it?
25. Has Crikey's tilt caused a Fairfax board debate?
By Stephen Mayne, candidate for the Fairfax board
Is there some sort of debate going on inside the Fairfax boardroom between the Packer-friendly forces of new chairman Ron Walker and the Murdoch-friendly forces of even newer deputy chairman Mark Burrows?
How else do you explain the failure of Fairfax to lodge its notice of meeting for the forthcoming AGM before Friday's deadline for lodgement of annual reports? The annual report and notice of meeting are always sent to shareholders together as a package and therefore usually lob with the ASX on the same day.
We've emailed Fairfax company secretary Gail Hambly seeking an explanation this morning and she said the delay was caused by "only the normal production processes - it will be mailed out with the Annual Report on about 15 October". It is worth looking at the timetable adopted by Fairfax over the past five years:
2005: Annual report September 30, no sign of notice of meeting by October 5
2004: Both lodged on September 27
2003: Annual report September 29 and notice of meeting September 30
2002: Both lodged on October 4
2001: Annual report October 2 and notice of meeting October 10
Interestingly, the only other year when there was a significant gap between Fairfax releasing its annual report and notice of meeting was when Crikey last ran for the board in 2001, as you can see here. For all its campaigning for free and fair political elections, the Fairfax board in 2001 did the dodgy "sorry there's no vacancy" trick and tried to charge $5,000 for access to their list of top 100 shareholders.
The timetables for listed companies are governed by a mish-mash of the ASX listing rules and the Corporations Law. Whilst annual reports for companies with June 30 balance dates must be lodged by June 30, the only requirement for notices of meeting is that they arrive 30 days before the AGM, which has to be held by the end of November.
I suspect the current delay has been caused by a board debate revolving around how badly they treat Crikey's candidacy. Knowing Ron Walker, he'll probably be recommending Fairfax take the low governance road. However, Mark Burrows is no fan of Ron so I suspect he'll be arguing for fairer treatment and a system that would make it more likely that the Packer-endorsed chairman could actually be booted from the board if enough institutions take issue with his conflicts.
Fairfax is on notice that we expect a simple majority of 50% plus one to be enough to get Crikey on the board and that its share register should be made freely available for canvassing purposes. They can either choose to do this, or be cowboys like those prolific Tasmanian tree slaughterers Gunns.
26. Burnside signs up to defend Mirvac against Chinese investors
By Stephen Mayne
Ever since leading the charge for the MUA in the Federal Court during the waterfront dispute of 1998, prominent Melbourne silk Julian Burnside QC has been regarded as a politically active barrister who leans somewhat to the left.
Burnside's media profile rose again when he tackled Alan Jones and John Laws during the cash for comment inquiry on behalf of the ABA in 1999. Then, after the Tampa sailed onto the horizon in mid 2001, he became a prominent campaigner on all things refugees and immigration.
But Burnside remains very active at the Victorian bar, and it's interesting to see that he has been retained by the giant developer Mirvac for a forthcoming case with racial overtones – a number of Chinese investors are suing Mirvac over a promised "golden tower" in Melbourne's Docklands precinct that turned out to be brown. Check out a news report on the dispute here.
Having Australia's most prominent advocate for refugees and human rights representing them claiming that nothing in the marketing to the Chinese investors was misleading or preyed on their poor English is a smart move by Mirvac. And for Burnside, $8,000 a day will be well earned if he can deliver the goods for his client.
Mirvac has just appointed James MacKenzie as chairman, who was introduced to Mirvac CEO Greg Paramor by Westfield boss Frank Lowy in 1994-95 when he was CEO of the Transport Accident Commission and trying to reduce its large exposure to direct property and development risk. The TAC ended up selling Melbourne's prestigious Southgate complex for more than $200 million to Paramor's Paladin vehicle which floated in on the ASX.
MacKenzie is one of the busiest business figures going around because he also chairs the two giant Victorian government insurance schemes, WorkCover and the Transport Accident Commission and sits on the board of Circadian Technologies, Amrad and the Victorian Major Events Company.
Mirvac is a big player in the sometimes dangerous construction game in Victoria, which could raise some interesting situations for MacKenzie. What happens if workplace safety issues ever flare up on the site of the company chaired by the man in charge of implementing the state's workers' compensation scheme? Would the Worksafe inspectors throw the book at their boss? Check out this example of WorkCover and Mirvac working together in Victoria on a PR initiative.
All up, there are plenty of interesting balls in the air for MacKenzie and he'll no doubt be taking a keen interest in Burnside's performance as Mirvac's selling tactics and building quality get put through the ringer by Slater & Gordon in the months ahead.
29. Is the RACV worth double what it claims?
By Stephen Mayne, candidate for the RACV board
The RACV claims it has net assets of only $757 million, but does anyone else agree with the view its true market value, not that I'm advocating any form of float or demutualisation, is closer to $2 billion. Here are a few key points to consider:
- The RACV is debt free, has cash in the bank of $277 million and reported a record $99.87 million net profit in 2004-05
- The 30% stake in the key joint venture with Insurance Australia Group (IAG) is valued at only $158.34 million yet it returned a fabulous dividend of $95.8 million in 2004-05. The true market value would be in the $600-$900 million range. IAG reported shareholder equity of $3.85 billion as as June 30 this year when its market capitalisation was $9.58 billion
- A whopping $219 million of franking credits sit on the balance sheet which would be valued highly if distributed to shareholders as franked dividends one day.
- After spending almost $200 million on the extravagant new headquarters at 501 Bourke St, the independent valuation of all RACV land and buildings only came in at $115 million as as June 30, 2005 . Either almost $100 million has been blown or conservative valuations adopted.
If the Crikey report that "the incumbents have... distributed flyers on windscreens across parts of Melbourne" is accurate, then it appears that they have broken State law in their campaigning. As the EPA's website makes clear, it is an offence punishable by a fine of up to $1048 to place advertising material on vehicles. I would have expected that such learned board members, with their lengthy experience with a motoring organisation, would know about such things!
And John Wood, a supporter of "distinguished" banker John Rawlins, writes:
Stephen Mayne‘s comments about the character and integrity of John Rawlins, current director of RACV, do him no credit. Stephen's snide remark about John's time at Tricontental indicates a total lack of knowledge of John's role and his courage and grit to stand against and apart from the Boards of Tricontinental, the State Bank and the Cabinet of John Cain.
John Rawlins was the one person who objected to the lending policies of Tricontinental and in particular against the lack of policies and procedures at Trico and the poor documentation of loans. In the end, John Rawlins resigned from the Board of Trico and his resignation caused great waves of venom against him from many sources. The stress and the disappointment that some colleagues did not support his stand caused his health to suffer. Stephen would do well to concentrate his efforts against the Cain Government of that time which unleashed Ian Johns on the financial world.
Rather than disparage John Rawlins, Crikey should have emboldened his image on Crikey's mast head as a tribute to courage under great adversity. While John Rawlins gained no financial advantage from his stand he does have his integrity and standing as an honest person fully intact. Crikey has not yet earned the right to take that away from John Rawlins.
Stephen Mayne responds:
I only pointed out that John Rawlins was a director of Tricontinental and this was not disclosed in his RACV CV after he called me "notorious" in a letter to members of a disabled charity he chairs and also attacked my disclosure practices for not revealing fellow candidate Paula Piccinini is my wife.
I was very careful not to say John was responsible for the calamitous $1.7 billion loss suffered by Victorian taxpayers. Indeed, do a Google search and you'll find this piece in the Crikey archive which quotes all the references to Rawlins at length from Hugo Armstrong's book about the collapse of Trico.
However, I am a strong believer of the view that directors who walk should talk. John should have either stuck around to fight the crazy lending practices from inside the Trico boardroom or resigned, as he did after three years in April 1988, and publicly blown the whistle to maximise the prospects of some remedial action being taken.
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