Senator WATSON(7.53 p.m.) —Tonight I wish to draw the attention of honourable senators to the increasingly responsible role and tasks undertaken by trustees of all the superannuation funds in Australia. The total retirement savings of all Australians has recently been estimated at $240 billion. This is predicted to grow to $2,000 billion by the year 2020. There are about 115,000 superannuation funds in Australia, of which 110,000 are small private funds with less than five members. These small funds are called the mums and dads schemes.

The Insurance and Superannuation Commission estimates that some 180,000 trustees of those funds are so small that they are excluded from a lot of the detailed compliance requirements under the SIS legislation—about 25,000 trustees of the remaining 5,000 funds. However, the industry is dominated by a small number of very large funds; the top one per cent account for more than 83 per cent of all superannuation fund assets, and 97 per cent of members.

Trustees are controlling increasing proportions of our national wealth, and their decisions can have a far-reaching impact on investment in Australia. Superannuation funds control 25 per cent of equities listed on the Australian Stock Exchange, and a six-fold increase is predicted over the decade of the 1990s. The import of the decisions made by the trustees of these funds on resource and infrastructure developments in our country, for example, is enormous.

I wish to take this opportunity of referring to some research undertaken by Dr Oldsberg, an economic sociologist and Director of the Australian Institute of Superannuation Trustees. Dr Oldsberg has just completed a major research of trustees' duties, responsibilities and levels of expertise.

Using a sample of 550 trustees representing a cross-section of various types of funds, she has found that: trustees are generally young; 40 per cent are under 40, mostly male; only 13 per cent are women and are usually a trustee of just one fund—about 75 per cent; trustees are extremely committed to their task—and that is the issue I want to emphasise tonight—and trustees are either nominated and appointed or elected to their board positions. The vast majority of them are not paid, and perform their duties in an honorary capacity. Rarely are trustees relieved of other duties to attend to their trustee responsibilities. The duties and responsibilities of these trustees are increasing. Their liabilities under the new Superannuation Industry (Supervision) Act are becoming more onerous and there is mounting concern among some trustees about the difficulties of meeting this challenge—but I think they are rising to the occasion very well.

She also found that trustees are working hard to develop their expertise to meet the challenges of growing and increasingly complex funds. The vast majority of trustees have done some specialised trustee education and training. Sixty per cent of trustee boards have a special allocation for trustee education and training.

The Australian Institute of Superannuation Trustees research reveals that despite the complexities of superannuation and the new demands of managing the funds, the trustees have an exceptional level of commitment and confidence in being a trustee. They have a personal commitment both to ensure that the funds perform as well as possible and thereby enhance members' retirement benefits and to safeguard members' retirement savings.

Trustees must be ever conscious of their responsibilities. They have not only a corporate but, unlike company directors, a personal responsibility. If they manage their funds prudently in accordance with the requirements of the SIS Act, they will have gone a long way to ensuring that the risk of fraud in their fund has been minimised and they will have discharged their responsibilities according to the act.

But a system whereby there is continual monitoring of funds and constant challenging of the effectiveness of the funds' controls and procedures is essential. They need to operate according to risk management procedures, maintain effective control and supervise vulnerable areas very closely. The responsibility for detecting and preventing frauds rests solely with trustees. They cannot delegate that responsibility, but they can take expert advice. For example, where an external administrator has been appointed, trustees must have foolproof assurance that this responsibility can be carried out within the context of the fund's internal controls.

Dr Oldsberg's research has found that, as the funds grow larger and member accounts become more substantial, trustees are beginning to adopt a more pro-active approach. They are moving from being fund administra tors to becoming active fund managers. They are now more actively searching for investments which will provide the greatest rate of growth for fund members commensurate with prudential safeguards. They are increasingly choosing equity ownership of Australian companies. They channel about 40 per cent of their assets into local equities. These investments will continue to have an enormous benefit in fostering the growth, development and efficiency of our economy.

There is an increasing interest in issues of board structures and governance, remuneration and performance of company senior management, the relationship of executive and independent directors on boards. But, as the Trustee of the Year, Ross Greenwood says, the trustee's role is easy while the fund is growing. However, where there is a contraction of funds, some trustees around may be ill-equipped to handle these situations. In this context training is absolutely essential. In this context the Australian Institute of Superannuation Trustees is setting up a national program of performance based training workshops for trustees, and I commend them on this particular initiative.