PRIVATE MEMBERS' BUSINESS: Employee Share Ownership
Mr CADMAN (Mitchell) (1.27 p.m.) —I would love the member for Rankin to go down to Wollongong and talk to the 11,000 employees of BHP who received $1,000 each, tax-free, as part of an employee share scheme.
Here are the Labor Party arguing that it destroys the integrity of the tax system to give employees share ownership. It is a disgusting argument they are putting to the workers of Australia; I am ashamed of them saying that they represent the workers. Up to 2.5 million ordinary shares have been offered to the workers of BHP—$11 million worth—and 11,000 employees are going to share in this. They are going to have a share of a great Australian company, and here are the Labor Party arguing today that that should not occur.
Dr Emerson —Not at the taxpayers' expense.
The DEPUTY SPEAKER (Hon. I.R. Causley)—The member for Rankin seems to disregard standing order 55, which is very clear.
Mr CADMAN —I cannot believe that you would advance those sorts of arguments. I know that you would agree, Mr Deputy Speaker, with BHP having shared its benefits and its profitability amongst its workers. The partnerships that develop between employers and employees and the prospect of working together for similar goals are things that should be endorsed and advanced.
There is research about the benefits of such programs. From New Zealand, Australia and Canada all the research I have come across is positive and supportive. For instance, in a recent study by the Consortium of Alternative Reward Strategies—
Dr Emerson —That sounds impartial!
Mr CADMAN —in New Zealand, 663 companies were examined, about one-third of which were small firms.
Mr Sawford —What's that called? A rorter's think tank?
The DEPUTY SPEAKER —If members wish me to explore standing order 304A, I will.
Mr CADMAN —Of the companies that quantified performance, productivity gains produced a 134 per cent net return. Built to Last, a study by Collins and Porras, found that one significant feature of visionary companies was the management succession of key employees. Promoting from within was almost a mantra in some of the visionary companies. This occurred where there was a sense of corporate ownership. In Canada, five-year profit growth was 123 per cent higher in ESOP companies. Net profit margins were 95 per cent higher. Productivity measured by revenue per employee—which is a rough measure of productivity, I grant you—was 24 per cent higher. Return on average total equity was 92.3 per cent higher. Return on capital was 65.5 per cent higher in these Canadian companies examined by the Toronto Stock Exchange.
Employee share plans have been used by many large companies such as AMP, ANZ—I have already mentioned BHP—Boral, Coles Myer, the Commonwealth Bank, IAG, Lend Lease, NAB, Qantas, St George Bank, Westpac and Woolworths. I cannot believe that there is not an anxious enthusiasm from Australians to advance these programs so that employees and employers benefit from their mutual goals and aspirations.
I have noticed that the Employee Ownership Association has proposed that there be variations to the current arrangements regardless of whether or not there should be an exempt or deferred process in the plans for ownership and tax treatment of these programs. The recommendation—which I think is a sensible one—would, rather than allowing either a $1,000 exemption from taxation or a deferral proposal, wed the two together so that the first $1,000 is exempt and any amount above $1,000 can be deferred until realisation, at which point the tax should apply. I think these are realistic suggestions that ensure that, rather than being tied down to a deferred or an exempt program, through a mixture of the two people have more flexibility to both defer and be exempt from taxation. It would be a significant advance on the current arrangements. I see a lot of commonsense in it. It would spread it to firms which need to be more flexible.
The percentage of Australians currently owning shares directly increased from nine per cent in 1996 under the Labor Party to 20 per cent in 1997 and then to 37 per cent in 2002, with a further 13 per cent owning shares indirectly through superannuation. These are great records. Apart from the family home, Australians have become the greatest owners of their own industries and their own businesses. That is what we need. We need involvement by the workplace. We need its application in the place where people gain the most benefits. (Time expired)
Author: Hon Alan Cadman MP
Source: House Hansard - 1st March 2004
Release Date: 7 Mar 2004