SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

SPEECH

10 August 2012

CEDA WOMEN IN LEADERSHIP SERIES

CLOSING THE GAP

ADELAIDE

TOPICS: GENDER EQUALITY, WOMEN ON BOARDS

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[Acknowledgements]

As Finance Minister, my role is often seen as a dry one – watching Government spending closely and keeping the Budget on track, saying ‘No’ to other Ministers and chasing efficiencies.

Yes, it’s true that those things are a large part of my job, but one of the privileges of being the Minister for Finance is that you work at the centre of government, and this means the opportunity to influence and implement change in how government functions.

In this context, one of my priorities has been to look at ways in which government as an institution can help improve the gender balance in Australia’s boardrooms.

It’s very clear, whether it’s in the private sector or in government, that there is still a lot of work to do to ensure boardrooms better reflect the diversity of our community.

This is not simply an issue of representation. It is an issue of ability.

Because if we’re not fully utilising the capacity and talents of over half of the population, then we’re holding ourselves back.

Julie Collins, as Minister for the Status of Women, is doing great work to advance equality for women in both the private and public sectors.

Because on this issue, government can demonstrate real leadership.

By improving diversity on government Boards, we can effect positive change on boards across all sectors.

But before I get on to that specific issue, I want to start my remarks today by discussing the broader issue of gender equality and the imperative for change.

 

I start from the proposition that there should be equality in all aspects of our lives.

Whether it’s on the basis of race, gender, ethnicity or any other attribute, we should be striving for a society where all people are judged on their abilities alone.

This has long guided my approach to public life – in fact, it’s been a guiding principle in all aspects of my life.

The principle of equality is fundamental to who we are; it is part of our collective philosophical foundations.

It has been one of the most enduring forces in our community.

And it is also about individual aspirations, about enabling every citizen to realise their full potential.

So, when we speak of equality – whether in terms of representation around the boardroom table or the achievement of equal pay – it is not simply a matter of fairness.

Equality is more than trying to get an equal share. It’s actually about the nature of our democracy.

It’s about enabling every citizen to achieve – and to have every opportunity to achieve – according to their capacity. 

It is about ensuring that no individual is constrained because of their gender, racial or cultural background or their sexuality.

And, just as the individual benefits from equality, so too does our society as a whole.

Sadly, this is one aspect in the case for equality that is often overlooked.

We all benefit if achievement is based on capacity because that is when the best person gets the job.

 

In Australia, we have certainly seen significant change over what has been a relatively short span of time.

If I look at my mother’s generation – their prospects for employment were typically limited to clerical, teaching or caring roles, and women were expected to retire when they got married.

Indeed, if I think back to the expectations society had of my mother and her four sisters growing up in the 1950’s, they were so distant to the aspirations I was lucky to have when I was young.

Just watch an episode of the ‘Mad Men’ series (as good as it is) and you can’t help but be struck by the unremitting sexism of the times it portrays.

Thankfully, the steps we’ve taken since the post-war era sees Australia a different country; a more equal country.

Of course, there is still more to do and the change is incremental, which is to be expected.

After all, each generation is informed and shaped by the generations that preceded it.

And, as each generation moves closer to an equal society than the one before them, improvement is made.

Today, you see a female Prime Minister and a female Governor General. There are three female Justices on the High Court and two State Governors are women.

In business, women are increasingly holding positions of influence, and we have women in leadership roles in the fields of law, medicine and science.

But the fact that these are noteworthy means we still have work to do.

Because they should be unsurprising.

My hope – and I’m sure this view is shared by everyone here – is that the steps our generation has taken will mean that my daughter and her generation, and all women that follow, will have even greater opportunities to succeed on the basis of their abilities.

 

But we must remember that the momentum for change is not automatic.

Just because we have witnessed change from my mother’s generation to mine, does not mean progress will continue for the next generation.

Rather, it must be spurred on by committed individuals.

We cannot rest on our laurels and assume that time alone will see equality occur.

It requires constant attention to not only make progress, but also to ensure that the progress made is not unwound.

As a Labor Government, we understand that real equality requires redressing the many factors of disadvantage.

And, in large part, our focus is on measures to improve women’s economic security.

Despite making up 45 per cent of the taxpaying workforce, on all measures of economic standing, women tend to be left behind.

Women still tend to earn less than their male counterparts and, due to time out of the workforce for those who choose to have a family, often retire with less superannuation.

The Gillard Government has gone some way to addressing this.

The Government’s reform to triple the tax-free threshold will see over 350,000 Australian women no longer pay any tax.

And for the 2.1 million women who earn less than $37,000, they’ll no longer have to pay tax on their superannuation contributions, boosting their financial position after employment.

What does this all mean?

Quite simply, it means fewer barriers and more opportunities for women at all stages of their lives.

It means economic security and the freedom to pursue new careers and move cities.

This is also why our Government supports women’s participation, which is highlighted through our investments in skills development and supported by accessible and affordable childcare.

Our reforms to child care have seen spending double, with the Government now contributing close to $4.5 billion this financial year.

Our Government is also very proud to have introduced the first paid parental leave scheme in Australia, which is already benefitting over 150,000 parents across the country.

The introduction of the Fair Work Act in 2009 has lead to the historic SACS pay equity claim, recognising for the first time that equal work should get equal pay, and the introduction of the Equal Opportunity for Women in the Workplace Amendment Bill 2012 will further drive changes in workplaces across Australia through increased transparency and accountability.

We have also committed to a target for women to make up at least 40 per cent of positions on Australian Government boards by 2015 – something that I will talk more about later.

These reforms will continue our progress to a more equal society.

And these reforms are the incremental steps being taken to achieve equality.

 

Within the broader spectrum of advancing the status of women, improving the presence of women in Australia’s boardrooms is an area of particularly interest to me.

Unfortunately the arguments for equality have not sufficiently influenced the makeup of our boardrooms.

Currently, just 14.4 per cent of board positions in ASX top 200 companies are held by women.

Of course, we should not discount the fact that this is a solid improvement from the 8.4 per cent of 2010, but something is still hindering the involvement of women on boards.

Increasingly the economic imperative of board diversity is influencing decision makers.

And, while we should not give up on arguments based in equality, the economic arguments may be more influential.

For example, a recent study by Credit Suisse directly addressed the question of whether gender diversity within corporate management improves performance.

The report found that over the six year time series they analysed, companies with at least some female board representation outperformed those with no women in terms of share price.

Large firms with greater than $USD 10 billion market capitalisation that had female board members outperformed those without female board members by 26 per cent over six years. For smaller firms the result was 17 per cent.

While the causality behind these findings may be contestable, the results speak for themselves.

And it seems that the business and investor community is noticing, as the report found a clear trend towards greater female board representation internationally.

In 2010, the ASX released changes to its Corporate Governance Principles and Recommendations that introduced recommendations relating to diversity.

A report released a couple of weeks ago by the ASX found that the majority of entities within the sample reported that they have established diversity policies which generally stretch well beyond gender.

Furthermore, more than half of the entities that had a diversity policy reported measurable objectives for achieving gender diversity.

These are positive results, and indicate a genuine shift in the thinking of corporate Australia.

Business leaders are similarly taking the initiative, with groups like the Male Champions of Change advocating for change.

Our business leaders are taking a leadership role in improving gender diversity, but the size of the challenge still before us means that all sectors should be doing their part.

To that end, I see a role for government to complement, and supplement the work of the corporate sector.

 

As I mentioned earlier, the Government has in place a target of 40 per cent of government board positions to be held by women by 2015, and we are on track to achieve this.

But, even in government, we face difficulties identifying candidates.

We find that it is often the same candidates being put forward time and time again.

This is not to say they aren’t well-qualified for these roles – of course not – but we often struggle to identify the many more talented women we all know are out there.

In part, this is a function of historical disadvantage and past practice.

In fact, when I became Minister for Finance I recall being presented with an all male shortlist for a Board appointment, to which I responded that if we couldn’t even find a suitably qualified woman to shortlist, let alone appoint, then we probably had some work to do.

That is why today I am announcing that the Government will establish a Women on Boards Network, to form better connections between Government and potential candidates.

This Network – which will be supported by the Department of Finance and Deregulation and the Office for Women – will identify potential candidates for government board positions, with a key focus of the Network being the appointment of women to their first board.

Indeed, one of the obstacles confronted by women across all sectors is that prior board experience is often required for appointments.

One of my male colleagues told me that he had improved the gender balance of shortlisted candidates by removing past board experience as an essential criterion.

But even when it is not part of the selection criteria, it can often be implicit in the selection process.

And with women holding so few board positions across the country, this practice amounts to a structural impediment.

That is why the early focus of the Women on Boards Network will be quite explicitly on getting women on their first board, to give them the start and the experience.

This Network, I believe can be a spring board for women into board positions.

We will see an increased number of women with board experience, and so expand the pool of candidates for corporate Australia to draw from in their own appointment processes.

And I hope that, over time, women who start their board careers in Government will go on to successful careers in business, and that they become the future leaders of change.

I will soon be writing to business leaders, stakeholders, advocate groups and peak bodies seeking their involvement in the Network – and I look forward to launching the Network later this year.

I need to stress that this will be an iterative and evolving process because it’s important the Network is able to change over time to respond to the needs of candidates and of government.

 

When I began my remarks today, I outlined the importance I place personally on achieving equality.

It has been a constant in my life, and will remain so.

In the sweep of time, progress between my mother’s generation and my daughter’s will be profound, but this type of change takes time. It takes longer than it should.

But it also takes perseverance.

There is a role for all of us to play in this – for today’s business leaders and tomorrow’s.

There is a role for government and business leaders and for everyone here today, and for women across Australia.

Because the changes we makes will shape the opportunities of future generations.

Thank you.