David Gonski says short termism and innovating the key issues for directors

In a wide-ranging interview, Mr Gonski said the biggest issue facing directors was how to balance short-term and long-term considerations when making decisions about company strategy and governance.

“Never before, in my opinion, has it become more starkly a question of whether you are governing for the long term or the short term,” Mr Gonski said.

He highlighted that the Federal Government’s Innovation Statement, released in December last year, had given business the confidence to explore new ideas. Specifically, proposed changes that will reduce the minimum bankruptcy period from three years to one year and provide a safe harbour from liability for insolvent trading for directors who engage restructuring advisers and pursue a turnaround plan.

“Any conservatism by directors has been driven, in part, by a fear of failure, with directors concerned that once a company becomes insolvent they lose the corporate protection and become personally liable.

“No director wants to lose their house and nor should they,” Mr Gonksi said.

“I’m not saying one should be cavalier about it; I believe in being very careful, but I do think that sometimes failure that does not involve fraud or misleading conduct is basically just part of life.

“Business inherently involves taking risks and sometimes when you prove something fails, you’ve actually taken a step forward for mankind by proving that it doesn’t work.”

The election of Malcolm Turnbull to the Prime Ministership has also given the business community a renewed confidence, said Mr Gonski.

“Malcolm is a businessman; he is a very good thinker, and I think the business community understands that.”

“We feel that we are now being consulted, that there are opportunities, and that we have people governing us who want to understand what we’re doing,” said Mr Gonski.

“This is not a criticism of the people there before, it’s just a fact,” he says.