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ABC Turmoil: A crisis in governance and government

For all the huff and puff in recent decades about the importance of accountability and transparency, surely imagined as a way of achieving more ethical conduct responsive to at least the stakeholders the organisation was intended to serve, little has changed in the world of organisations. Whether government or business, commercial or nonprofit, many continue to conduct themselves by privileging their own goals with little regard for anyone else. That is especially so at the level of the board and senior management. The adherence to market economics has meant restrictions on government funding which have driven declining ability of market regulators to achieve their purpose.

The Financial Services Royal Commission  has revealed greed and a disregard for the customer by banks and insurance companies. Energy retailers “invested” tens of billions in poles and wires despite declining energy demand and  the inefficiency of centralised generation and consequent distribution over long distances. Time after time, when executives or board members or ministers are asked to explain why certain actions had been taken or events had occurred, no-one is available for interview!


In September 2018, the ABC, the most trusted public institution in the country, its role once strongly defended by Malcolm Turnbull, revealed its governance to be a mess, raising serious questions about appointments to and behaviour of the  board.

First thing Monday 24 September ABC Chairman Justin Milne announced that managing director Michelle Guthrie had been dismissed! She was half way through her four year contract. Five days later Milne himself resigned.

Milne’s actions were seriously questioned by critics, including those from the political “right”, columnists and media observers. But like the overthrowing of Malcolm Turnbull as Prime Minister almost exactly a month earlier, Milne and other Board members seemed unable to explain coherently why Guthrie was dismissed.

Was there political interference? Politicians from former Prime Minister Turnbull to Minister Senator Fifield strenuously denied they had. Milne had, however, intervened personally, seemingly in response to comments by Turnbull and Fifield. He had advocated sacking two senior journalists and personally spoken to staff about a programming issue.

But after the dismissal of Guthrie and revelations of Milne’s interventions various Ministers government made clear they did not support Milne. Prime Minister Morrison said Milne’s resignation was the right decision.

What did emerge was that the government had not followed the previously established procedures for the appointment of board members which was developed in the time of Minister Stephen Conroy: the panel considered nominations and forwarded their views to Minister Fifield but other persons were appointed directly without reference to the panel. Merit was not a significant factor in the decisions. The result was a board with no expertise in journalism and only two with media expertise, one of whom had been a financial officer at a commercial tv network.

When questioned the Minister’s office refused to divulge the names of all persons who had been considered, including those who had been recommended by the panel established to consider potential members, but were not appointed. This action in itself constituted an intervention intended to influence the broadcaster’s presentations. That was naïve: it demonstrates a lack of trust in the board and staff that they would act professionally. Centralised control does not work!

Interventions like that recall those actions of commercial organisations that try to prevent or limit inquiries into their actions by independent regulators or auditors.

Two former board chairs – David Hill and Donald McDonald – were unequivocal in their view that Milne’s interventions were entirely improper.

Milne’s criticisms of journalists were largely without merit.

Commenting on Milne’s actions, Peter Fray & Derek Wilding of the University of Technology Sydney (UTS) drew attention to section 8 of the ABC Act requiring the Board to maintain the independence and integrity of the Corporation and concluded that “independence should have trumped integrity” in Milne’s actions.

The Australian Broadcasting Corporation Act 1983 specifies the duty of the board to ensure the Corporation’s functions are efficient with maximum benefit to the people of Australia; it is also to maintain the independence and integrity of the ABC.

The Act also states that the Board shall ensure it considers any request by the Minister to consider any matter relating to broadcasting, digital media services, or any matter of administration relevant to the performance of the functions of the Corporation.

The functions and responsibilities of the ABC are set out in its charter. It is required “to provide within Australia innovative and comprehensive broadcasting services of a high standard as part of the Australian broadcasting system consisting of national, commercial and community sectors”. Its programs are to “contribute to a sense of national identity and inform and entertain, and reflect the cultural diversity of, the Australian community”. It shall take account of services provided by the commercial and community sectors, provide a balance between program with wide appeal and specialised programs, have regard to the multicultural nature of the Australian community.

It must be stressed that the ABC has been attacked on many occasions by Ministers and Prime Ministers over the last several decades. And funding, which is triennial, has been severely cut on several occasions over the last 20 years. When David Hill was Chairman he coined the slogan that the public broadcaster cost taxpayers only 8c a day: it is now 4c!

The ABC reports 62% of its expenditure devoted to making content and a further 21% to content delivery including transmission and distribution. Only 8% is reportedly spent on central services and non-content administration. It’s budget is a billion dollars: in per capital terms funding has halved over the last 30 years and various efficiencies have saved $324 millions in the last five years.

Governance and leadership emerge again as critical issues. What were the personal attributes given priority in the choices made? Recent events, in the ABC as well as in other organisations as diverse as banks and insurance companies, some telecommunications companies, and many others, even sometimes the Sydney Opera House and Cricket Australia, expose common problems..

Do people appointed to these positions have the high levels of judgement required? Do they have the capacity to lead and a clear understanding of the contribution of governance as distinct from management? And do they know how an effective organisation works and how it best meets its responsibilities to various stakeholders?

Writing after only a few days into the Royal Commission’s inquiry into financial institutions New Daily columnist Michael Pascoe wrote, “The bigger story behind these early days of the royal commission is the trashing of the entire Big End of Town, of the great and the good who make up the nation’s network of ASX 200 directors, CEOs and CFOs, of the chairmen and women who reached the peak of Australian corporate culture – the top of a big five board table – only to be shown to be, at best, incompetent”.

Every Coalition government in the last 40 years has held an inquiry into the ABC, the Turnbull Government two, as veteran broadcaster Kerry O’Brien pointed out when he addressed a rally by Friends of the ABC in Sydney on July 8 2018. O’Brien recalled that Malcolm Turnbull, shortly after the election of the Abbott Coalition government and months away from being appointed Minister for Communications. “I was at an ABC function in Parliament House when Malcolm Turnbull arrived, and I was the nearest person to him. .. He didn’t exchange pleasantries. He simply said, the ABC has never been more important than it is today. He was referring to the destructive way the digital revolution was impacting on what we now quaintly call legacy media—mostly newspapers. Five years later, the ABC hasn’t changed. The impact of digital technology hasn’t lessened. The challenges are as stark as ever. The only element that has changed in these five years is Malcolm Turnbull.”

The ABC produces a huge range of programs on numerous platforms: the criticism from politicians concerns only a small part of the ABC’s offerings, its news and current affairs programs, especially those on TV. The statements on ABC programs and its website that prompt charges of left-wing bias and lack of balance, which are refuted by the public in survey after survey, often are merely statements which don’t support the views of government ministers or supporting commentators. The ABC has a fact-checking process which, according to the experienced financial journalist Alan Kohler, is more rigorous than that of any other media organisation: we can note that its Fact Check unit was axed in the 2016 Coalition budget cuts. But it was relaunched the following February as a co-production with RMIT which hardly says it doesn’t care about accuracy.

Investigative reporting on programs such as Four Corners (TV) and Background Briefing (ABC RN) has huge influence. Think Royal Commissions into aged care quality and safety, the Financial Services Royal Commission, the Royal Commission and Board of Inquiry into the Protection and Detention of Children in the Northern Territory and the Royal Commission into Institutional Responses to Child Sexual Abuse for instance as well as the reporting on live sheep exports, greyhound racing, energy retailers investments, etc, etc.

Commercial broadcasters have sought to limit the operation of the ABC from the very beginning. Even before the ABC made its first broadcast in May 1932, Sir Keith Murdoch was pressuring the Federal Government to change the legislation that created the ABC — in effect, restricting the public broadcaster from collecting its own news. The struggle continues!

The turmoil at the ABC is largely the consequence of the appointment of Milne,  presumably influenced by Turnbull. Milne had no experience in broadcasting notwithstanding his involvement in several companies engaged in software development and data management as well as the broadband business[1]. Had this experience uniquely qualified him to chair a large and complex organisation like the ABC? It is a question which should be asked about many directors of organisations, including government and semi-government ones.

The behaviour of the government in ignoring the advice of the panel set up to consider board nominations was strongly criticised by Neil Brown, a former minister in the Fraser government: he accused Communications Minister Mitch Fifield of “making a fool of himself”. Brown asked, what was the board doing while the various machinations were going on; he accused the board of lacking legitimacy and called on the seven remaining directors to resign.

Mr Brown, now a QC, felt the selection panel had been verballed by Malcolm Turnbull and Senator Fifield when the pair announced Milne’s appointment. They claimed the panel had “recommended” Milne, when in fact he had only been placed on a list with at least four other candidates.

“Now to me, that press release gave the impression that the panel actually said that Milne was the only one who should be appointed. It didn’t. It seems to me the minister is grossly misleading people, actively misleading the public.”

The internal dynamics of the ABC and the competence of Guthrie as CEO are matters which have hardly surfaced and the reasons given by Milne and the Board for her sacking remain unclear. Senate hearings are exploring relevant issues; an internal investigation is, in late October, ongoing and the acting MD has made it clear its details will not be made public.


Managing Director sacked, Chairman resigns

On Sunday 23 September, the ABC board held a special meeting, presumably without its Managing Director. It decided to terminate the appointment of Michelle Guthrie as Managing Director with immediate effect. Chairman Justin Milne called Prime Minister Scott Morrison late that afternoon to tell him. (It later emerged that Communications Minister Mitch Fifield was told of “issues” two weeks before.) On Monday morning first thing Guthrie was told. Milne said “the directors resolved it was not in the best interests of the ABC for Ms Guthrie to continue to lead the organisation”.

Guthrie was devastated and claimed she was unaware of any shortcomings on her part: she felt her termination was not justified, and she was considering her legal options.

“While my contract permits the board to terminate my appointment without cause and with immediate effect, I believe there is no justification for the board to trigger that termination clause,” she said. “At no point have any issues been raised with me about the transformation being undertaken, the Investing in Audiences strategy and my effectiveness in delivering against that strategy.”

“As the first female managing director of the ABC, I felt a tremendous responsibility and unique privilege to lead Australia’s most important cultural institution. At all times I have promoted the ABC’s importance to the community, including having to defend and protect the ABC’s independence.”

Milne was appointed to the board of NBN in November 2013 by the Coalition government and was appointed chair of the ABC in March 2017. At the time of his appointment to the ABC, Milne said in an interview his friendship with Turnbull would have “zero impact” on his role as chairman of the public broadcaster. “He wants robust, well-managed institutions; he doesn’t want to be king of Australia,” Milne told the Sydney Morning Herald at the time. “I don’t think he will be ringing me up and saying ‘Get that person off Q&A’ or anything like that.”

Though a huge number of articles appeared in print and electronic media dealing with the turmoil at the ABC many hardly went beyond reporting the events. A few analysed the situation: several were by scholars in the journalism field or previous board members of the ABC. There were also some commentaries on the role of government and on the way in which Milne, understood the role of Chair vis-à-vis the powers of government.

Writing immediately after Guthrie’s departure, Margaret Simons of Monash University in one of several excellent articles[2], wrote (in Inside Story 24 September 2018) that the departure of Michelle Guthrie exposed the weakness of the current ABC board and its strategy:

The board turnover since Guthrie was appointed has been near total, but there is a strong feeling among the incumbents that Anderson [director entertainment and specialist and now acting Managing Director] would have been a better pick. But the make-up of the board itself is part of the longer-term problem.

Labor’s communications minister, Stephen Conroy, set up an arm’s-length selection process to get rid of the worst of the political stacking. It worked — kind of. We now have a board made up of similar corporate types, none of whom, other than staff-elected director Jane Connors, have experience of and understanding of content.

Then the current communications minister, Mitch Fifield, failed to follow the new process for the board appointments announced in February 2017. He appointed Vanessa Guthrie, a Western Australian company director with a background in the mining industry, instead of the nomination panel’s recommendation.

So who missed out? Or rather, whom did we miss out on? I lodged a freedom-of-information request for that information close on a year ago, but it was refused by the government. It is currently on appeal with the federal information commissioner.

Meantime, when Justin Milne was appointed chair in 2017 one of his perceived strengths was his friendship with Malcolm Turnbull. Not only did that relationship fail to deliver visible benefits, but the calling card has relatively quickly expired.

Under former managing director Mark Scott, the ABC chair and the managing director would tour the Canberra corridors together, singing from the same song sheet. This did not happen at any time when Guthrie was in the job.

Various members of staff responded to the news in various ways, some expressing support for the decision, others not. There was a general view that Guthrie was not popular with staff. In particular, David Anderson, who was a few days later appointed acting managing director, expressed more than surprise and stated he was unaware of any relevant background. Indeed he said, “Michelle challenged us in a lot of ways to be better, challenged us to free up more money for content and went about that over the last two-and-a-half years. Her relationship with the board is not something the leadership team could actually see, nor will I criticise Michelle in any way for the last two-and-a-half years.” He asserted the ABC had “a talented and aligned leadership team”.

On 26 September, two days after Guthrie’s termination was announced, Milne issued a statement about the role of the ABC Board: “The job of the ABC Board is to independently govern the Corporation, protect its best interests, ensure that it is well funded, well managed and that our content is of the highest standards. That is precisely what the Board has done and will continue to do. I do not propose to provide a running commentary on day to day issues which arise in pursuit of our duties.”

In Sydney and Brisbane staff held lunch hour meetings, on 26 September, the same day as Milne issued his statement, to protest the “disturbing” allegations about the actions of Chairman Milne. The Media, Entertainment & Arts Alliance drew attention to “political interference” and asked that the Milne stand aside to allow an investigation to proceed.

In the flurry of reports and commentary, further documents emerged. They included inquiries and objections by former Prime Minister Malcolm Turnbull and Communications Minister Fifield to some online articles and commentaries by Chief Financial Correspondent Emma Alberici and senior news journalist Andrew Probyn. Milne, it emerged, regularly spoke to executives, including news director Gaven Morris, about contentious stories or content he didn’t approve of.

In particular, two articles by Alberici were asserted to contain serious errors.

In emails to Managing Director Guthrie Milne stated that the Government strongly disliked the statements and expressed the view that “you can’t go on criticising the government that provides funding”. He appeared to acquiesce to government complaints about “bias” by calling for the chief economics correspondent to be fired because she was damaging the public broadcaster’s standing with Coalition MPs.

“They [the government] hate her. We are tarred with her brush. I think it’s simple. Get rid of her. We need to save the ABC – not Emma. There is no guarantee they [the Coalition] will lose the next election.” These comments were contained in an email sent to Ms Guthrie on May 8 and were circulated to board members on Friday 21 September, two days before the board met to sack her. Milne, Guthrie alleged, called for political editor Andrew Probyn to be “shot”; there were other claims including that Milne was acting to appease the Coalition government.

The most frequently mentioned article by Alberici, “There’s more to jobs and growth than a corporate tax cut”, was published 22 February 2018 and concerned the government’s proposed legislation to reduce the tax on large corporations.

Commenting on that article Macquarie University Honorary Professor and author of a recent book on banks Jocelyn Pixley pointed out, “the evidence supports her work overwhelmingly. The reason the LNP government objected to Alberici’s work on cuts is because LNP promoters gave the slimmest of justifications. The claim about the “jobs and growth” that would ensue from the tax cuts is no longer believable, if it ever was.”

It is a fact that there has been a trend in recent years for companies to use retained earnings to buy back stock and distribute bigger dividends. Several journalists, expert in economics, supported Alberici’s article, crikey’s Bernard Keane writing, “Far from being, as alleged by the ABC, too opinionated, Alberici’s piece is a collation of straightforward facts.” Keane also said “media competitors [of the ABC] are also increasingly failing to properly inform Australians.” He went further: “The only “tax fraud” being perpetuated here is the one by the government, business and media cheerleaders like the AFR [Australian Financial Review] — the broad daylight transfer of over $60 billion from taxpayers to the world’s largest corporations under the verifiably false pretences that the money will be used to increase investment and wages.”  The AFR, one of the strongest critics of Alberici’s article, did not even consider the share buybacks worthy of mention in its comments.

The ABC made some changes to the article after further editing in response to complaints – the subject of Keane’s criticism – changes which led to further criticisms by others! The other article by Alberici which drew Turnbull’s ire concerned the government’s policy on innovation: it contained some errors.

Milne tried to prevent Triple J moving the broadcast of “the Hottest 100” away from Australia Day. Trying to convince the ABC Board to reverse the decision, he said, “Malcolm [Turnbull] will go ballistic”. According to Amanda Meade in the Guardian, “Multiple sources have said that Guthrie supported the Triple J decision, which was taken after a year’s consultation, and convinced the board not to bow to pressure from the government. There was huge pressure on the ABC because the communications minister, Mitch Fifield, had asked the ABC board to reconsider the decision to move the Triple J Hottest 100 from Australia Day because it was “making a political statement” by taking an action that would “help to delegitimise Australia Day”.”

Milne’s interventions proved to be his undoing: at the end of the week he resigned. So, in five days the ABC lost both its Managing Director and Chairman, more than just carelessness! In an exclusive interview with the ABC 7.30‘s Leigh Sales, Milne said he “wanted to provide a release valve”. (Sales herself said she had never been told that her statements caused problems and that she welcomed comments on any errors.)

“Clearly there is a lot of pressure on the organisation, and as always, my interests have been to look after the interests of the corporation,” Milne said. “It’s clearly not a good thing for everybody to be trying to do their job with this kind of firestorm going on.” Milne’s decision to stand down and his decision was welcomed on twitter by Prime Minister Scott Morrison.

On The Drum on ABC TV on 27 September, the executive director of think tank Per Capita,  Emma Dawson who was once on the staff of Stephen Conroy, then Minister for Communications (and Broadband and the Digital Economy), made the forceful point that the funding of the ABC is public money and the ABC as a public broadcaster has as its first obligation serving the Australian public. In Conroy’s office Dawson had been involved in framing procedures for selection of members of the board of the ABC. In other words, the ABC is not an instrument of government policy in the way a government department is.

Demanding the ABC support the political policies of the government of the day, as opposed to the legitimate oversighting role of the organisation by the government through the Minister to ensure that it performs according to its charter, is not legitimate. In other words, Milne’s justifications for his action were completely inappropriate: the assertion “you can’t go on criticising the people that give you money” is a complete misreading of the ABC charter.

While Government can vary the funding and require changes consistent with implementation of its charter it cannot link funding decisions with the broadcaster’s behavior or dictate what the ABC says or does. Of course politicians like the Minister and present and former Prime Minister Turnbull denied they ever have. Paul Keating would also. On the other hand influence doesn’t have to be explicit. A clever politician achieves results without seeming to do anything! Confronted with criticism of funding cuts the response would, of course be to deny any link with criticism.

As mentioned already Michelle Guthrie informed the board of the actions of the Chair in mid-September, shortly before she was dismissed. She released an 11-page dossier on Friday 22nd in which she claimed she was terminated “in part because of my disclosure about the chair’s inappropriate conduct towards me and [interference] in the independence of the ABC”. Is there any link between that and the decision announced by Milne on Monday 25 September to terminate Guthrie’s contract?.

Kirstin Ferguson, company director, adjunct professor at the Queensland University of Technology Business School and a member of Chief Executive Women and Women Corporate Directors, was named acting chair of the board on Friday 28 September, a week after Milne’s resignation. Ferguson released a statement a week after Milne resigned: “To clarify various media reports, the board received a letter from the Guthrie late on Friday 21 September 2018.

“In that letter, Ms Guthrie responded to several issues that the board raised with her. In addition, the former managing director raised other matters that she requested the board investigate on a confidential basis. The board resolved on Sunday 23 September 2018 to appoint an external, independent expert advisor to investigate these matters. That investigation is under way, and it is not appropriate for the board or the ABC to make any further comment pending its completion.

“[The] board has always acted in the best interests of the ABC, has fully debated any issues presented to it and ensured that editorial independence has been maintained. We are united in defending the independence of the corporation. We have done our job thoughtfully and with due regard to board process.

“The board is focused on supporting the acting managing director David Anderson, his leadership team and all employees in fulfilling the ABC’s charter remit and serving the community.”

A search is being undertaken for a replacement for Ms Guthrie. In light of the Government’s behaviour in appointing people to the board, it is surely more than interesting that when Prime Minister Scott Morrison was asked early October whether he would consult Labor before announcing the new ABC chair, he replied “no”, “There’s a process for appointing chairs and board members to the ABC,’” he told a media conference. “We’ll follow that process. The elected government makes appointments to these boards.” Indeed! But wait!

The Monthly Today (written by Paddy Manning) of 25 October, a month after the turmoil erupted, reported that ABC budget cuts will affect programming, and that the process for appointing a new ABC chairperson has itself been politicised by choosing recruiting firm Korn Ferry, the Board practice of which is chaired by former State Coalition MP Katie Lahey. Previously, tenders were called for selection of ABC and SBS Board members. Labor Senator Kristina Keneally tweeted about the decision, which was made after running a “closed select tender”. That emerged in a response from the Department of Communication in Senate Estimates Committee! Do these people never learn? The excuse was that filling the position, which has a relatively low remuneration, was urgent. Oh right, OK then. Nothing to see here!

(Perhaps it is as well to keep in mind that, so far as the Coalition Government is concerned, anything that is going wrong is the fault of the previous Labor government and that any process established by that government or its predecessors is entirely unsuitable.)

In mid-October it was reported that an inquiry headed by the Communications Department secretary, Mike Mrdak, had been unable to determine whether former ABC boss Michelle Guthrie’s handling of the “Alberici and Probyn matters” had a “direct impact” on the board’s decision to dismiss her. He also said that not all the documents requested had been supplied by the ABC.

The Senate will investigate the ABC’s independence; the Coalition supported a Greens motion referring management of the broadcaster to the standing committee on environment and communications. Greens communications spokesperson Sarah Hanson-Young, who moved the motion, said the inquiry would “investigate recent instances of political interference and the undermining of the broadcaster’s independence”. The probe will focus on Michelle Guthrie’s sacking, the broader conduct of the board and former chair Justin Milne, and “the political influence or attempted influence of the government over ABC editorial decision-making”.

The inquiry will bring to five the number of current inquiries into the ABC: an efficiency review, a competitive neutrality inquiry, a departmental investigation ordered by the communications minister, Mitch Fifield, and an inquiry by the ABC board itself into the Milne allegations.

October 18 brought the news that Michelle Guthrie was suing the ABC alleging the Board had “no reason to trigger the termination clause”. A spokesperson confirmed that she had filed a claim with the Fair Work Commission but did not reveal what damages were being sought.

On the morning of the by-election in Turnbull’s former seat of Wentworth former staff representative on the ABC Board and distinguished journalist Matt Peacock outlined questions Prime Minister Morrison had to answer concerning the broadcaster. A poll conducted in the electorate by Friends of the ABC had put Liberals among the last in preferences in respect of support for the ABC and Independent Kerryn Phelps among the first.

Peacock observed, “When she was managing director, ABC staff used to wince over Michelle Guthrie’s nervous media performances, doubting she had the mettle for the top job. Since she’s been sacked, though, she has more than demonstrated her capacity as a street fighter. She’s already toppled chairman Justin Milne and now she’s going after the rest of the board.

“And it’s a safe bet that more revelations are coming about what she claims to be intolerable pressure from Milne to pander to the government of his friend, former prime minister Malcolm Turnbull. So too, inevitably, will more details emerge about the ham-fisted manner in which the board got rid of her, which has to go down in history as one of the most inept sackings of a chief executive of any public corporation, let alone a cherished,  publicly-owned national institution like the ABC.”

Of Justin Milne, Peacock said, “We are talking here about a chairman who was prepared to sacrifice the ABC’s senior political and economic correspondents to please an angry prime minister.”

He suggested legislating the ABC triennial package could bring more stability over funding. But he also forecast further staff cuts as the funding indexation freeze worked its way through the system: likely the staff to go would be new jobs in regional and rural communities, something National Party Senators could fight against. (Good luck with that!)

He concluded, “The Abbott and Turnbull attacks on the ABC reflect a worldwide assault on public interest media. The Trump era of fake news is upon us, sponsored by Rupert Murdoch and nurtured by the extreme right. Public media is a fundamental ingredient for vibrant democracy. We should fight for it.” The by-election in Wentworth saw the biggest swing against the incumbent government since Federation, in a seat always held by the Liberal Party (or its political predecessors): Phelps won the seat.


The Challenges of Governance and Leadership

Milne had little if any understanding of the meaning in operational terms of the independence of the ABC and of the proper role of a board chair. His behavior contrasts with that of former Chair Donald McDonald’s experience: a friend of Prime Minister John Howard, McDonald reported (on ABC TV’s The Drum) that Howard made it clear he did not want to have any informal discussions with McDonald about the ABC, that if McDonald wanted to discuss any concerns then he should seek an appointment in the Prime Minister’s office.

Is corporation law relevant? Directors of a company are regarded as owing ‘fiduciary duties’ to the company. “Fiduciary duties underpin the important legal relationship between the director and company. They are based on notions of trust and good faith and cannot be compromised. Directors must not place themselves in a position where they are unable to make decisions in the best interests of the company. Amongst the fiduciary duties owed to the company are “the duty to act in the interests of a company as a whole”. These duties are in addition to those imposed by the Corporations Act 2001 (Cth).

Was Milne’s intervention in the best interests of the corporation in privileging what he clearly understood to be the views of the Prime Minister and the government? Appointing persons to the board who were known to have certain views sympathetic to the political position of the government but not knowledgeable about the nature of the business of the Corporation arguably placed them in a position where they might not give the best interests of the Corporation, especially its independence, appropriate priority.

Milne and the board ought to have had to go through proper procedures to assess whether the actions of staff to which Turnbull and others objected breached professional standards and actually compromised the organisation and if so whether the actions merited dismissal. They ought also to have considered whether their actions did in fact advance the organisation’s goals. Unfortunately in recent years, there has been an increasing tendency for organisations in the commercial sphere and governments to arrange things so that they don’t need to give any reasons for their actions.

The literature on governance is substantial and that on leadership huge. Governance is a complex matter requiring high levels of judgement and experience. The value of a board is that a group of persons generally deliver judgements superior to those of a single individual in the face of complex challenges. In relations with the executive they should ensure that agreed procedures are being implemented, not take over the functions of management, a point reiterated ad nauseum.

The challenge for boards was addressed by Robert Townsend in Up the Organisation (Jossey Bass, 2007), “the board should tell the CEO when the organisation is heading into the wrong part of the forest”. In Townsend’s view most boards don’t know where the forest is! And whether Michelle Guthrie was heading into the wrong part of the forest has not been established.

In an extremely important document, “Strengthening the Governance of Arts Organisations”, published in 1979 by ARTS Ltd (then headed by Timothy Pascoe), the central requirement of board members was spelled out as “to believe in the aims of the organisation and be prepared to work to achieve them”. Like much else on the subject that seems to have sunk into oblivion. Very unfortunately there is often a refusal by boards and executives to admit any deficiencies. Comments from union organisations and staff are often especially unwelcome. Distinguished arts administrator Justin Macdonnell in his book Arts, Minister? (Currency Press, 1992) is amongst many who have commented on these issues.

Every organisation should have a proper complaints procedure: the executive staff play a critical role in managing that and in turn that should be ensured by the board. The board’s role is ensure that such a procedure exists, is effective, equitable in having appropriate provisions, and is applied sensibly by the executive. It is not to handle complaints itself any more than it is to have its own policy on issues that are the proper concern of the executive. That has been made clear on countless occasions yet some board directors seem to ignore it, if they know of it at all!

Whatever the provisions they are a very poor substitute for a feature critical to organisations, effective performance management which ensures that above average achievement is recognised and decisions to terminate employment after consistent failings are properly considered and do not come as a surprise. A feature allegedly that of corporate management has been brought to bear in the public sphere: rather than a search for superior individual or group behaviour there is a hunt for bad behaviour. The consequences of such an orientation should be obvious!

It is increasingly common that instead of supporting and counselling the executive it is considered easier to issue edicts and commands. That simply does not work! It is like using labour hire firms to recruit the staff to carry out the work of the firm so as to avoid having to devote resources to training staff. It might be cheaper in the short term in that they don’t have to train staff but it does longer term damage: the costs of continual instruction continue.

Few people perform in an above average manner when their own initiative is suppressed, when the procedures to be followed are instructions from above. That is especially so when creative people are involved. What does work is spelling out the longer term goals and making every effort to have staff develop the most effective ways to achieve them. Making every effort to appoint the best possible people is critical. It is just like the job of casting a film, play or choosing musicians for an orchestra or surgeons for a hospital. What is critical is the way people work together and the way decisions are made. It is the social processes or systems which must be got right.

The recognition that the principal role of the Chair of the board is to encourage the contribution of the board as a whole is likewise overlooked: instead, often some supposedly powerful person is appointed who turns out to be little short of a dictator or alternatively ineffective.

Equally importantly, the chief executive/managing director must understand and be capable of implementing behaviours most likely to contribute to achievement of above average performance of the organisation which means the people in it. The chair and the board must understand what those behaviours are and what skills and experience are essential. The sometimes mentioned purpose of the board to hire the CEO and sack them if they don’t perform is simplistic and close to useless. So is the notion that the principal focus of the board should be ensuring the finances are well managed: financial success attends superior achievement of the organisation’s purpose, not the other way round.

The events at the ABC and the behaviour of the government are not without parallel. That is not to suggest that the pursuit of staff of the ABC in 2018 are as serious as those at the BBC in 2003. The BBC is one of the most celebrated of public broadcasters but like the ABC has faced severed funding cutbacks. In May 2003, reporting doubts about the evidence supporting Britain joining the US invasion of Iraq led to a reporter being sacked and both the Director General and the Chair of the Board forced to depart.[3] Subsequent inquiries concluded that indeed the evidence of was inadequate. There is nothing new in the realisation that governments have difficulty when faced with evidence of their lies.

Shortly after the horror week at the ABC, Sydney radio station 2GB’s prominent broadcaster Alan Jones verbally confronted Sydney Opera House (SOH) CEO Louise Herron on air because she refused to agree to requests by Racing NSW, supported by the Daily Telegraph newspaper, to display certain images and words on the sails of the Opera House to promote the 13 million dollar Everest horse race.

Though there was widespread condemnation of Jones’ abuse of Herron, Prime Minister Morrison (who described the SOH as the biggest billboard in Sydney), Deputy Leader of the Federal Labor Party Anthony Albanese as well as Leader of the Labor Opposition in NSW Luke Foley supported the decision of NSW Premier Berijiklian to instruct the SOH to display the racing images. None of them criticised Jones’ behaviour.

Over 300,000 people signed a petition opposing the use of the SOH for this purpose and hundreds of people crowded the forecourt on the evening the images were projected. Nothing whatsoever was heard from the ten members of the SOH Trust! (Four of the Trust have significant involvement in the arts; Chair Nicholas Moore is CEO of the Macquarie Group, chair of Screen Australia and a director of the Centre for Independent Studies.)

In late October a report by Simon Longstaff of the St James Ethics Centre was released into the performance of Cricket Australia, especially focusing on concerns about the “ball tampering episode” in the recent South African tour which led to three players including the captain being suspended. The report dealt with the culture at the organisation and its attitude to winning. At a meeting just days before the report was released the then Chairman was re-elected. After fronting the media after release of the report to express confidence in the future “going forward” Chairman David Peever resigned in the face of “a groundswell of anger”.

Provisions which allow termination of employment for any reason whatsoever do not help. That Milne’s behaviour should be no more sophisticated than that of the trustees of the Australian Museum in 1874 in having the then director Gerard Krefft ejected from the Museum by bailiffs simply because he didn’t inform them of certain minor matters and, unfortunately at the time, strongly supported the then relatively new theory of evolution by natural selection, should be astonishing. But as someone once said we don’t learn from history and that is the problem with history.

Government ministers’ central conceit is to persist in the view that by appointing to boards and organisations, persons who share their ideological positions the organisation will perform in accordance with government’s wishes!

Lack of domain knowledge is not the sole reason for the turmoil though it is a consequence of the selection process, since in “group think” terms, members of a group are likely to follow the views of the leader even when they have doubts about the wisdom, even legitimacy, of those views. In this particular case, the directors of the ABC presumably knew of the Chair’s actions in calling for the dismissal of the two senior journalists and presumably did not seek, or if they did, did not succeed in persuading him from his position. In the case of his physical intervention to seek to stop Triple J from shifting its broadcast of the top 100 from January 26 they did prevent Milne’s wish. But Milne had already personally approached ABC staff with his demand.

The focus of media commentary and criticism covering the ABC turmoil quite appropriately was on the freedom of the ABC, its arm’s-length relationship with government, the inability of the Minister to instruct them on … what exactly? Did he ask how they would work to advance the organisation and defend it? Whether they would act individually and collectively in a manner most likely to encourage superior performance, especially through their knowledge and understanding of how to go about that.

Not surprisingly various people have been inclined, since the events unfolded, to make recommendations for further action to prevent these kinds of things happening again. One suggestions is to revise the process by which directors were appointed to the board, to have the Senate consider all the proposed appointments. This recalls the situation in the United States where hearings examine all senior cabinet and judicial appointments. This is a silly make-work proposal.

First, directors didn’t get there because there was not a proper procedure in existence: they got there because existing adequate procedures were sidelined. Secondly, there is no evidence that large numbers of politicians are likely to exert superior judgement on the performance or skills of a person who might be appointed to a complex position. Human judgement is notoriously unreliable: history reveals many people who turned out to be highly successful being branded initially as having little merit and people appointed in the belief that they were superior being a failure: Jonathan Shier some years ago at the ABC and Carly Fiorina at Hewlett-Packard are examples of the latter.

People at large do need to have the opportunity to contribute where it concerns them but extreme care needs to be exercised in acting on the views expressed: often the outcome is dominated by the opinions of special interest groups of those few people who speak loudly and passionately.[4] Above all, every organisation requires that those in charge exercise superior judgement and that means both clearly understood and agreed on purposes and goals and especially that there is a commitment to taking the greatest care in selecting the people to be in charge.

In other words, an important priority is that those in these important positions be able to demonstrate that they think! Simply having been in business or some prominent outfit or other is not adequate or even relevant. People from business keep being appointed to boards of nonprofits as if they have superior skills. They don’t! The nature of each organisation and the environment in which it functions is subordinated to generalisations about managerialism, generalisations which are dangerous!

The ABC is, as Malcolm Turnbull said “a vital part of the nation’s polity” and “[has] never been more important than it is today” (as reported by Kerry O’Brien). In September and October 2018 scores of prominent people, in frequently broadcast promos on TV and radio, have made similarly strong claims. The ongoing funding cuts are wholly inconsistent with that. The assertions by the Institute of Public Affairs, of which Minister Fifield and many other Coalition MPs and Senators are members, and by Young Liberals, that the ABC is irrelevant and should be privatised are nonsense and should be called out for that[5].

In Australia generally in public affairs, increasingly a few in society are benefitting significantly whilst the vast majority of the community are marginalised. Special interest groups and those prepared to pay for influence are achieving dominance. Economist Ross Garnaut has recently pointed out that “Australia’s independent centre is being drowned out”. Public discourse is being hollowed out. It is to the vitally important independent centre that the ABC is directed. Or it ought to be!

It is critical to the future of Australia that the ABC benefit from the best possible governance and leadership. The public expect governments to make sure of that!

End Notes

[1] Milne had been an executive at internet provider, Ozemail during the 1990s. Turnbull, then an investment banker, was a major investor. In 2000, Turnbull’s $500,000 investment in Ozemail was sold for $57m when the company was taken over, catapulting Turnbull into serious wealth. Milne went on to work at Telstra

[2] Simon’s subsequent articles are “ABC board is weak and lacks legitimacy but it should not be sacked”, The Guardian 28 September; Guthrie and Milne, “No Friends of the ABC”, Meanjin September 26, 2018; “Who missed out on the ABC board?” Inside Story 1 October 2018; Amanda Meade in The Guardian is amongst several other reporters with extensive coverage of the events and the ABC itself.

[3] The Government eventually forced the resignation of Gilligan which was followed by the resignation of the BBC’s Director-General Greg Dyke and chairman Gavyn Davies. Dyke was arguably one of the most competent persons the broadcaster had had in that role and was hugely popular with staff.

Gilligan’s report was based on information supplied by Dr David Kelly, scientist and weapons inspector employed by the Ministry of Defence. In July 2003 Kelly committed suicide: the sorry tale was the subject of a truly outstanding article, The David Kelly Affair (December 8 2003) by New Yorker Magazine’s John Cassidy.

An inquiry into the death of Dr Kelly by Lord Hutton was  denounced by critics as a kangaroo court. A number of subsequent inquiries in Britain and in the United States into whether the available intelligence justified the invasion have found in the negative but stopped short of accusing Blair or George W Bush, or John Howard, of lying.

Though Howard continued in the face of the Chilcot Inquiry to blame faulty intelligence, the then secretary of the Intelligence Committee Margaret Sweiringa pointed out that his quotations from the parliamentary inquiry were “selective to the point of being misleading”.

[4] A contemporary example could be the appointment of judges to the US Supreme Court. Others concern the reactions to the sculpture by Rodin depicting the Burghers of Calais and the response to the Vietnam Memorial in Washington DC. People privilege their preconceived views rather than analyse evidence and preferences.

[5] In a “roundtable” discussion of republicanism on ABC RN’s Sunday Extra on 4 November, the President of the Young Liberals asserted that the British Monarch was a God-given entitlement.