Senator SHERRY (3:11 PM) —There are some eight million active members of superannuation funds in Australia. By `active' I mean that money is actively going into their superannuation funds. Superannuation for the vast majority of Australians is in fact compulsory. It is to assist them in providing an additional retirement income when they get to retirement. So compensation, when moneys are stolen from their superannuation fund through no fault of the fund members, has a very significant impact on people who are retired or coming up to retirement. There were extraordinary circumstances in the case of Commercial Nominees of Australia Ltd. We are not talking about losses in Commercial Nominees as a result of a poor investment or a lack of diversification—

Senator Watson —Yes, we are—extraordinary failures.

Senator SHERRY —Overwhelmingly, Senator Watson, we are talking about moneys that were stolen as a result of theft and fraud. The interesting thing about Commercial Nominees is that this is the first case in 10 years where prima facie theft and fraud under the act have been determined. It is a very important case, and there is a very unusual set of circumstances. The Labor opposition does not suggest that the government provide an absolute guarantee in all circumstances for superannuation funds. What it does suggest is that the SI(S) Act is quite clear in the case of theft and fraud. The act allows the minister to declare full compensation. Why in the event of theft and fraud occurring—which is fortunately a very rare occurrence—should a person coming up to retirement or in retirement have to spend sleepless nights worrying about what they are going to live on if their money has been taken as a result of theft and fraud?

The other compounding fault in this case was the action of APRA. Senator Watson, Liberal senator and Chair of the Senate Select Committee on Superannuation, has pursued APRA very zealously. Senator Watson has acknowledged that, had APRA taken action earlier than it did, the losses would not have been as great. Senator Watson is a very strong critic of the role of APRA in the case of Commercial Nominees. But who set up APRA? Who set up this regulator to protect Australian workers' superannuation? The Liberal government set it up. The Treasurer, Mr Costello, proudly boasts that APRA is the world's greatest regulator. He is on record time and time again saying that APRA is the world's greatest regulator. But certainly in the case of superannuation and Commercial Nominees and certainly in the case of HIH, APRA—the regulator set up by the Liberal Party—has been found wanting. It has not been doing its job, and it has been rightly criticised. So that compounded the problem those Australians who are members of Commercial Nominees had to face.

The Labor Party does not suggest that in all circumstances where there might be poor investment return there should be compensation, because that is not an issue of theft and fraud. The issue in regard to Commercial Nominees is an issue of theft and fraud. What is important about the Commercial Nominees case is that it is the first prima facie case of theft and fraud in the last 10 years. The minister herself pointed out that it was the Labor Party that inserted special protection in respect of superannuation in the Superannuation Industry (Supervision) Act. The special protection is that, where prima facie theft and fraud is declared, there can be 100 per cent compensation—in other words, full compensation—in those circumstances. It was the Labor Party that set up that full protection in these circumstances.

We are not critical of the minister being slow; she has been the minister only since October last year. If any criticism should be handed out—again, I think Senator Watson acknowledged this—it should relate to the poor performance of her predecessor, Mr Hockey. Goodness knows what he was doing in his previous position because the time dragged on and on and on. So we are not critical of Senator Coonan in that regard. What we are critical of is that, having a KPMG report saying prima facie, `Yes, theft and fraud occurred,' the minister did not award full compensation, as she can do under the act—100 per cent compensation. This is not an issue of moral hazard; we are dealing with a very narrow case, a very important case, where 100 per cent compensation— (Time expired)