Report
Introduction
1.1
On 25 June 2015 the Senate referred the Australian Government Boards
(Gender Balanced Representation) Bill 2015 (the bill) to the Senate Finance and
Public Administration Legislation Committee for inquiry and report by 8 September 2015.[1]
On 7 September 2015, the Senate granted an extension until 10 November
2015.[2]
1.2
The bill, introduced into the Senate on 24 June 2015, is a private
senators' bill sponsored by Senators Xenophon, Lambie, Lazarus and Waters.[3]
Purpose of the bill
1.3
According to the Explanatory Memorandum (EM), the bill seeks to
implement existing policy in relation to gender-balanced representation on
Government boards:
The existing policy, introduced by the [previous] Government
in 2010 and maintained under the current Government, provides for a gender
diversity target of 40 per cent men on Government boards, 40 per cent
women, and 20 per cent to be made up of either gender. This bill seeks to
move from the current aspirational target to a positive obligation that will
apply in relation to each appointment to a Government board.[4]
1.4
The second reading speech states the bill will 'emphasise the
Government's position as a leader in gender equality'.[5]
Conduct of the inquiry
1.5
Details of the inquiry, including links to the bill and associated
documents were placed on the committee's website at: www.aph.gov.au/senate_fpa.
The committee also directly contacted a number of relevant organisations to
notify them of the inquiry and invite submissions by 31 July 2015. The
committee received 14 submissions and these are listed at Appendix 1.
1.6
The committee held a public hearing on 12 October 2015 at Parliament
House in Canberra. A list of the witnesses who gave evidence at the public
hearing is available at Appendix 2.
1.7
The committee thanks all those who made submissions and appeared at the
hearing.
Background to the bill
1.8
In late 2010, the then Labor Government committed to a target of 40 per
cent representation for both women and men on Australian Government Boards by
2015.[6]
The then Minister for the Status of Women, the Hon Kate Ellis MP, noted the
importance of improving the representation of women on boards:
We know that boards make better decisions when they are
representative of the entire community. Tapping into women's skills and
experience is not just good for women – evidence shows that a gender balance in
top level decision making roles and forums is associated with improved
governance and decision making.[7]
Current gender balance on
Australian Government Boards
1.9
The latest Gender Balance on Australian Government Boards Report
2014-15 (2014-15 Report) was released on 8 October 2015.[8]
Table 1 of the 2014-15 Report shows the gender balance on Australian Government
Boards as at 30 June for the previous three years.[9]
Table 1: Gender Balance on Australian Government
Boards
|
Year
|
Number of boards
|
Number of positions
|
Number of women
|
Number of men
|
% women
|
|
2015
|
361
|
2570
|
1005
|
1565
|
39.1
|
|
2014
|
387
|
3206
|
1272
|
1934
|
39.7
|
|
2013
|
460
|
4039
|
1685
|
2354
|
41.7
|
1.10
The 2014-15 Report also sets out portfolio performance against the
gender diversity target.[10]
Figure 1: Portfolio performance against the gender
diversity target
Other measures
1.11
In addition to the 40:40:20 gender balance target, there are other
measures in place to increase the representation of women on Government boards.
1.12
Boardlinks is a government initiative which provides opportunities for
women to be appointed to Government board positions by:
-
enhancing opportunities for women actively seeking leadership
roles, and enhancing their economic and workforce participation; and
-
providing a valuable resource for organisations – public,
private, and not-for-profits – through identifying talented and board-ready
women, which will assist with addressing skill shortages, and improving
economic and governance outcomes for organisations in all sectors.[11]
1.13
On 8 October 2015, the Minister for Women, Senator the Hon Michaelia
Cash, announced new 'BoardLinks Champions':
The new Champions are leading Australian business figures,
who will work with Government to strengthen the BoardLinks programme.[12]
1.14
The Gender Balance on Australian Government Boards Report
2013-14 (2013-14 Report) noted the following partnerships that the
Australian Government has developed:
-
with the Australian Institute of Company Directors to deliver the
Board Diversity Scholarship programme; and
-
with the Australian Mines and Metal Association to deliver the
Australian Women in Resources Alliances E-mentoring programme.[13]
1.15
On 8 October 2015, the Minister for Women announced the Government would
also commit $100,000 to help fund Chief Executive Women scholarships to support
women's participation and leadership in science, technology, engineering and
mathematics (STEM) industries.[14]
Summary of the bill
1.16
As stated above, the bill would implement in legislation the existing
Government policy in relation to gender balance on Government boards. The
current policy provides for a gender diversity target of 40 per cent men and 40
per cent women on Government boards, with the remaining 20 per cent to be made
up of either gender.
1.17
The second reading speech explains which Government boards the bill will
apply to:
The bill applies the gender balance target to Commonwealth
entities under the Public Governance, Performance and Accountability Act
2013; Ministerial advisory committees; review committees where the
appointments are made entirely by a Minister or the Cabinet; and Commonwealth
statutory authorities. This definition is consistent with the boards that are
currently required to report for the purpose of the Gender Balance on
Australian Government Boards Report.[15]
1.18
The bill provides for certain exceptions from the obligation for gender
balance on Government boards, including where there are 'extraordinary
circumstances that mean it is not reasonably practicable...to comply with the
obligation'.[16]
The EM describes what constitutes 'extraordinary circumstances':
For the purposes of this bill, extraordinary circumstances
may be considered to have occurred when the Government appointer can
demonstrate that reasonable efforts have been made to find a candidate of the
appropriate gender, and despite these efforts it has not been possible to
appoint a suitable candidate of the necessary gender to meet the requirement of
at least 40 per cent men and at least 40 per cent women on the relevant
Government board.
For these purposes, reasonable efforts would include where
all of the following steps have been taken:
- the
board vacancy has been advertised and/or there has been a call for expressions
of interest in the board position;
- relevant
government databases such as AppointWomen or BoardLinks have been searched for
potential candidates;[17]
- a
gender balanced shortlist of candidates has been compiled;
- candidates
have been interviewed that reflect the gender balanced shortlist; and
- each
candidate has been evaluated against a consistent set of selection criteria.[18]
1.19
The bill also sets out reporting requirements in relation to the targets
for gender balance on Government boards. The EM notes:
[The bill] replicates the existing reporting requirements for
Government portfolios, under which they are required to provide statistical
information to the Office for Women for the purpose of publishing the Gender
Balance on Australian Government Boards Report. Currently, the report is
consolidated and published by the Department of [the] Prime Minister and
Cabinet as the portfolio under which the Office for Women sits...
The bill requires...each portfolio department to prepare a
report each financial year, setting out the gender composition of each
Government board within that portfolio. Further, the Minister for Women must
then publish that information in a consolidated report, to be tabled in
Parliament.[19]
Discussion
Benefits of gender balanced boards
1.20
A number of submissions referred to the research demonstrating the
benefits of gender balanced boards. For example, the Women's Leadership
Institute Australia stated:
There is a vast body of research, both locally and globally,
demonstrating the "business case" for gender diverse boards and
leadership teams. Gender diverse boards (as opposed to those with no gender
diversity) achieve higher financial returns. They also perform better on a
range of other metrics, including increased levels of innovation, improved
corporate governance and better average growth.[20]
1.21
The Australian Institute of Company Directors also highlighted the evidence
that increasing gender diversity on boards improved corporate performance.[21]
1.22
The Community and Public Sector Union (CPSU) outlined why it was important
for Government boards to lead the way on this issue:
There is strong evidence that gender-balanced boards are more
effective, and the role of the public sector in serving the interests of the
Australian community demands public sector boardrooms that reflect the gender
diversity of our community. Furthermore, government must provide leadership to
the private sector in this area, where despite positive trends gender diversity
among company directors and key executive management personnel remains
generally poor.[22]
1.23
Similarly, the Equality Rights Alliance, argued:
Achieving gender equity on Government boards and thereby
increasing women's representation, participation and leadership in the public
domain is a critical policy imperative...Government boards are an opportunity for
the Federal Government to lead by example on increasing women's leadership and
participation. Beyond the instrumental benefits engendered by women's equal
participation, women have a right to equal participation in public life
leadership and decision-making.[23]
The 40:40:20 target for Government
boards
1.24
Submissions also noted the overall improvement in the gender balance of
Government boards since 2010 when the 40:40:20 gender balance target was
introduced. For example, Women on Boards stated:
The success of [the] Gender Balance Target for Government Boards...is
evident in the numbers; as at 30 June 2011 women held 35.3 per cent of
the 460 Government boards and bodies, rising to 41.7 per cent in the two
years to June 2013. Significant gains were made in traditionally male dominated
portfolio areas including finance, treasury, employment [and] workplace
relations and industry [and] innovation.[24]
1.25
However, Women on Boards expressed concern at the figures for the 2013-14
financial year:
[T]he number of positions held by women fell by two per cent
as at June 2014, spectacularly so in the case of Prime Minister [and] Cabinet
and the areas of Employment and Education.
Perhaps the most problematic figure from the 2014 report, and
a concerning indicator of where gender balance on Government Boards is tracking
is that 36.5 per cent of the 639 appointments in 2013 were awarded to
women. In some portfolio areas this number was significantly lower and not
even close to the number of female appointments required to continuously meet
the 40 per cent target currently in place.[25]
1.26
The former Sex Discrimination Commissioner, Ms Elizabeth Broderick, also
noted that individual portfolio progress in relation to the representation of
women is 'mixed', but placed the 2013-14 figures into a broader context:
The findings of the Government's [report for 2013-14], show
that women held 39.7% of the 3,206 board positions on 387 Australian Government
boards and bodies as at 30 June 2014. This figure represents a 2% decrease
in numbers since June 2013, a 1.3% increase since June 2012, a 4.4%
increase since June 2011 and a 5.2% increase since June 2010. While
the June 2014 outcome of 39.7% is slightly lower than that of
June 2013 at 41.7%, the overall results are nonetheless indicative of a
general increase in overall Government board appointments for women since the
establishment of the 40:40:20 target.
A four year comparison of the number of Government board
portfolios to have met or exceeded the gender diversity target also yields some
positive results. As at 30 June 2014, nine Government portfolios out of 18 met
or exceeded the 40:40:20 target, compared with five portfolios out of 19 in 2010,
when the target was first established.[26]
1.27
The overview to the 2013-14 Report notes that the year was one of
'significant change and transition' for the Australian Government and its
boards, agencies and committees:
The Government has repealed a range of legislation and
reporting requirements as part of its deregulation agenda. The Government is
also making progress to reduce the size of government and to ensure that
government services are as efficient and well-targeted as possible.
The findings of the National Commission of Audit informed the
Government's agenda to minimise the size of Government, including the
rationalisation of the number of boards. As a result a number of boards were
reduced in size, merged with other bodies that performed similar functions, or
abolished as part of this reform agenda in 2012-14.
As of 30 June 2014, the number of reportable boards decreased
to 387 from 460 at the same time in 2013. The number of board positions also
decreased from 4,039 to 3,206. New appointments to Government boards throughout
2013 has almost halved in comparison to 2012-13 – from 1,069 to 639.[27]
1.28
The 2013-14 Report also referred to 'significant restructures of
portfolios and departments' and noted:
As a result of these changes...it is not possible to directly
compare some portfolio level-level data in [the 2013-14 report] with that of
previous years.[28]
1.29
At the public hearing witnesses commented on the recently released
2014-15 Report, which showed that the overall representation of women on
Australian Government Boards was 39.1 per cent. Ms Carolyn Hewson, a
director of BHP Billiton and the Stockland Group, noted:
You are all well aware of the government's current bipartisan
policy of the 40-40-20 target—which I recognise is a great policy position. It
has been in place since 2010 and, indeed, reaffirmed by each government since
then. However, in the last two years it appears the policy has been easy to neglect
and the downward trend in proportion of women on government boards from a high
of 41.3 per cent in 2013 to 39.1 per cent now is disappointing. At present, the
bipartisan policy of 40-40-20 and its accompanying reporting arrangements do
not appear to have the support of, nor be taken seriously by, a number of
government ministers. Even after five years, there are still nine of the 18
portfolios currently not meeting the targets and two portfolios remain under 30
per cent for female representation.[29]
1.30
At the public hearing, Mr Troy Sloan, Acting First Assistant Secretary, Department
of the Prime Minister and Cabinet (PM&C), outlined why there may be a decrease
in the overall representation of women on Government boards:
Consistent with the government's smaller-government agenda,
there has been a significant decrease in the number of boards and board
positions and that has, in my understanding, contributed somewhat to that
decline.[30]
1.31
Mr Sloan described the report as a 'backward-looking document'
and noted that the time of appointment of board members was the more important
time for consideration of gender balance.[31]
To this end, Mr Sloan referred to the guidance in the Cabinet Handbook in
relation to proposals for appointments, which requires that a Minister's
proposal should confirm that 'due regard has been paid to gender balance in
appointments'.[32]
1.32
In terms of the role the Office for Women has in the process, Ms
Donna-Jean Nicholson, Acting Assistant Secretary, Office for Women, PM&C,
explained:
The Office for Women do play a coordination role, and we do
support portfolios in their work to meet the gender diversity target.[33]
1.33
However, in an answer to a
question on notice, PM&C noted:
Individual portfolios are responsible for ensuring gender
balance in board appointment processes, including adherence to the policy on
appointments in the Cabinet Handbook and [the Australian Public Service
Commission's policy guideline] Merit and Transparency: Merit-based selection
of APS agency heads and APS statutory office holders.[34]
1.34
The committee also sought information about changes to the presentation
of data between the 2013-14 and 2014-15 Reports, particularly that the
percentage of men on Government boards is not included in the 2014-15 Report.
Mr Sloan stated that he did not think that there was any particular reason for
the change.[35]
Issues in relation to the bill
1.35
While the majority of submissions expressed support for the bill, the
Australian Institute of Company Directors (AICD), while acknowledging the need
to increase the number of women on Government boards, opposed the introduction
of legislated quotas:
International experience suggests that quotas do not
necessarily generate the desired outcomes...There is also a risk that the use of
quotas will mean that women who are appointed to government boards as a result
of the legislation will be viewed negatively. Research has shown that more
prescriptive forms of affirmative action can undermine and marginalise those
who benefit from it as they are viewed as less competent or deserving.[36]
1.36
AICD pointed out potential negative impacts of the bill:
As a general proposition, we are of the view that mandated
standards of corporate governance result in a "one-size-fits-all"
approach which should be avoided wherever possible. Appointments to boards need
to be made based on the business needs of an organisation, including the skills
and abilities that it needs represented on its board.
There is also the risk that, by mandating a certain
percentage of women be appointed, this will act as a hard ceiling on female
representation on boards. Quotas can have the effect of focussing attention
only on reaching the required percentage without providing any incentive [to]
exceed the quota or to address any underlying issues that may have caused the
lack of diversity.[37]
1.37
In a supplementary submission the AICD noted its understanding that the
bill's intention is to strengthen the existing policy target and not to
introduce a quota. AICD indicated it would support the bill with amendments
which focussed on targets, accountability and disclosure.[38]
1.38
At the public hearing, Dr Mikayla Novak, Senior Fellow, Institute of
Public Affairs, was unconvinced of the potential impact of the bill:
The representation of women in private and public sector
management has been on the long-term improve, though not as fast as many would
like. So the question is: what kinds of strategies are most conducive to
bolstering diversity? Although the bill would surely effect a change in
Commonwealth public sector hiring practices, it is not entirely convincing that
the bill will effectively usher in the broader gender diversity improvements
that are so widely desired.[39]
1.39
Dr Novak argued:
[T]he general trajectory for economic improvement for women
in terms of representation on boards has been on a dramatic long-term improve
and you would expect that trend to continue in as much as human capital
accumulation continues and in as much as there is continuing openness within
the labour market.[40]
1.40
Ms Carol Schwartz, Founding Chair, Women's Leadership Institute
Australia stated the reporting obligations in the bill were such that 'there is
no additional reporting burden or red tape on the government or the public
service to report on these targets'.[41]
Ms Carolyn Hewson also argued:
It is important to understand there is no additional work
required for data collection, and to oppose this bill on the basis of
additional red tape would be unequivocally wrong.[42]
1.41
However, proposed paragraph 8(3)(d) of the bill does require that an
explanation be provided where there have been any appointments during the
financial year which did not comply with the requirement the Government boards
must be gender balanced. Mr Troy Sloan, Acting First Assistant Secretary,
PM&C confirmed that under the current policy there is no requirement for
such an explanation to be provided.[43]
Mr Sloan indicated that no work had been done by PM&C to determine the
additional resources which would be required in obtaining that additional
information.[44]
Mr Sloan emphasised that with respect to the information which is currently
collected:
The Office for Women invest a lot of effort in quality
assuring the numbers we are providing and in going back and checking with
departments to ensure that the report is of a high enough quality to be
released.[45]
Other measures to improve gender
balance on Government boards
1.42
As noted earlier, the current gender diversity target is complemented by
other measures. The 2013-14 Report provides more details on some of these
measures:
The Government has shown its commitment to fuelling the
leadership pipeline with strong, confident and capable women, by partnering
with a range of world class organisations.
The Government is partnering with the Australian Institute of
Company Directors to deliver the Board Diversity Scholarship programme. The
programme has been significantly expanded, contributing $650,000 over two years
to deliver 140 scholarships to targeted groups of women.
A partnership between the Government and the Australian
Minerals and Metals Association has also been established to deliver the Australian
Women in Resources Alliances E-mentoring programme. The Government is providing
$440,000 over two years to the programme, which will support talented women in
the mining and resources sector to advance their careers through mentoring and
technical training.[46]
1.43
The 2013-14 Report notes that while the government has a role in increasing
women's representation in leadership and participation in the workforce
generally, business must also play a part:
Continued action and innovation from business is essential to
boosting the presence of women at all levels of an organisation, specifically
in leadership and decision making roles.
The Government recognises the many initiatives underway in
the business sector to promote women in leadership. For example in 2013, the
Business Council of Australia set a target of 50 per cent female representation
in all senior management roles in their member organisations within a decade.
The Male Champions of Change initiative – established in 2010
by the Sex Discrimination Commissioner, Ms Elizabeth Broderick – comprises 21
men in November 2014 in senior leadership positions from business and the
public sector, who are dedicated to advocating for the improved representation
of women in leadership positions.
The Government is also providing practical assistance to
improve women's representation on Australian boards, including through the
BoardLinks Programme.[47]
Committee view
1.44
The committee strongly supports the policy of gender balance for
Government boards. The research on this matter is clear: gender diversity on
boards improves overall outcomes.
1.45
However, it is the committee's view that legislated targets for gender
balance are not the best way to achieve this goal. Since the 40:40:20 gender
balance target was introduced in 2010, there has been overall improvement in
female representation on Government boards. In fact, in 2012-2013 the
representation of women on Government boards surpassed 40 per cent.
1.46
The committee acknowledges that the 2013-14 and 2014-15 figures show a
slight decrease in female representation on Government boards, falling just
below the 40 per cent target for women on Government boards overall. However,
these figures must be viewed in the context of change and transitions within
portfolios and across government, which have impacted on the make up of
Australian Government boards and the rationalisation of the number of boards.
1.47
The committee does not believe that these figures are a reason to
legislate for gender balance targets. The committee notes that the government
is supporting programs and providing practical assistance to improve women's
representation on Australian Government boards, such as Boardlinks and the
Board Diversity Scholarship programme.
1.48
In the committee's view, the 2013-14 Report provided more details on the
context of the 40:40:20 policy and a more expansive explanation of the measures
that the government are investing in order to assist portfolios to meet the
targets. The committee suggests that future reports are presented with the same
level of detail as the 2013-14 Report.
Recommendation 1
1.49
The committee recommends that the Senate not pass the bill.
Senator Cory Bernardi
Chair
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