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Monday, 20 June 2011
Page: 3322

Senator CORMANN (Western Australia) (20:04): The coalition does not support these bills. The reason we do not support these bills is that this government is completely obsessed with ensuring that its friends in the union movement get overall control, on this occasion over military superannuation and military pension arrangements. Why would it be, when only 41 per cent of public servants are members of a union, according to ABS data, that 100 per cent of employee representatives on the board created under this legislation will be ACTU nominated representatives?

Forty-one per cent of public sector employees are members of unions; 59 per cent are not. The majority of public sector employees choose not to be part of a union. Yet 100 per cent of employee representatives on the board to be created under this legislation—a board which also has responsibility for military pensions and military superannuation arrangements—will be ACTU representatives. Not only that, but also the ACTU president is the only one who can nominate employee representatives of the board. The Minister for Finance and Deregulation, who has responsibility for ComSuper, is not able to dismiss any of them without getting the agreement of the President of the ACTU. Why is that appropriate? I do not think that any reasonable person in Australia would think that that is appropriate.

This is yet another example of the Labor Party looking after the vested interests of the people who put them here. Every single senator representing the Labor Party in this chamber and every single member of the Labor Party in the House of Representatives has to be a member of the union, courtesy of the constitution of the Labor Party. That is why the unions have a stranglehold over the sorts of decisions that are made by this government on issues like this. It would be much more appropriate for employee representatives on the board created under this legislation to be much more repre­sentative of the diversity of employee interests, including the 59 per cent of employees who choose not to be a member of a union. But, no, they have got to use their time in the sun, their time in government, to make sure they lock in as many benefits as possible for the vested interests of the union movement. This is about lining the pockets of the union movement, yet again, at the expense of the public interest.

During Senate estimates we asked questions about the current Aria board. This is the board that looks after all of the public sector superannuation arrangements. There are seven people on the board. Three are guaranteed positions to be dominated by the ACTU. But guess what? It just happens that four out of the seven representatives on the Aria board are representatives of the unions, so the unions have got the numbers on the Aria board. Why is that? Because, other than the ACTU nominated positions, the government has made it its business to make sure that it puts another union representative on the board. You can laugh, Senator Feeney; I know that that is a matter of great amusement for you.

The ACTING DEPUTY PRESIDENT ( Senator Moore ): Senator, through the chair.

Senator CORMANN: Through you, Madam Acting Deputy President: Senator Feeney may well laugh; he may well find this amusing. He might not think that it is appropriate to have superannuation trustees on those boards who are focused on the best interests of members of the funds, irrespective of whether or not they choose to be members of unions. He might not think that it is important for the 59 per cent of public servants who choose not to be members of unions to have a voice on these bodies. He might find that very amusing, to the point where he dismisses as an ideological hatred for unions any concern that the coalition expresses. Through you, Madam Acting Deputy President, I say to Senator Feeney: I do not have any hatred for unions whatsoever. The coalition does not have hatred for unions. But we think it is entirely inappropriate to have legislation setting up a corporate governance structure for super funds which entrenches a completely unrepresentative model where 41 per cent of employees who choose to be members of a union happen to get 100 per cent of the employee representative positions on the board.

These are serious matters. In the broader superannuation industry, this government has been very reluctant about and in fact has opposed many of the recommendations arising out of the Cooper review to improve corporate governance arrangements in the superannuation industry. Why? Because the union movement does not like it. The union movement does not like recommendations that improve transparency, corporate governance and integrity—things like super­annuation trustees should declare foreseeable conflicts of interest to APRA if they want to sit on multiple boards; things like the requirement to have independent directors on superannuation boards. This government has a pattern when it comes to superannuation: whether it is in the Public Service or in the private sector it is guided by one thing, and that is to protect and to pursue and to be an agent for the vested interests of the union movement. This legislation is a very sad example of this.

The minister talks about—I am sorry, Madam Acting Deputy President, I have promoted Senator Feeney—

Senator Feeney: Good instincts!

Senator CORMANN: The parliamentary secretary talks about the significant benefits of scale. We actually explored that with APRA, the regulator, during Senate estimates. APRA said that there is absolutely no evidence of the so-called benefits of scale—in particular, if you put the ACTU in such a dominant position over the funds not only of public servants but also of our defence personnel.

We have raised these concerns with the government and they of course are pressing ahead with this current model. The reason we have expressed those concerns to the government is that those concerns have been expressed to us very strongly, in particular by representatives of the defence community. We understand that the government cannot afford to do the wrong thing by the ACTU because the ACTU have a hold over them. The ACTU would not allow them to press ahead with changes that in any way undermined their stranglehold over the Commonwealth superannuation arrangements into the future. The reality is that the government should come up with a governance model which is more repre­sentative of the diversity of public sector employees' backgrounds and perspectives.

These bills establish ComSuper as a statutory agency consisting of a CEO and staff. The bills merge the existing trustees for the Commonwealth civilian and military superannuation schemes into a single trustee body, the Commonwealth Superannuation Corporation. The function of ComSuper is to provide administrative services to the Commonwealth Superannuation Corpora­tion, with the CEO of ComSuper appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence.

The Commonwealth Superannuation Corporation will be trustee for all of the existing Commonwealth super­annuation funds, including the Commonwealth Super­annuation Scheme, the Public Sector Superannuation Scheme, the Public Sector Superannuation Accumulation Plan, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Force Retirement and Benefits Scheme. The Commonwealth Superannuation Corporation Board will consist of 11 members appointed by the Minister for Finance and Deregu­lation, with five employer directors chosen in consultation between the finance and defence ministers, three members nominated by the President of the ACTU, only two members nominated by the Chief of the Defence Force and one independent chair.

The reason that the coalition continues not to support these bills is because, as I have mentioned, the ACTU has completely disproportionate representation on the board and is the exclusive representative of public sector employees on that board. The current legislation still contains provisions which make it unacceptable to the defence and veteran communities. Although the bill now contains a reference to the unique nature of military service, the bill's other inclusions, particularly with regard to the disprop­ortionate ACTU representation, mean that military members' interests are not properly represented or safeguarded. The bill still gives excessive power to the ACTU with regard to appointments of board members, termination of board members and quorum arrangements for board meetings.

I will just go through some of these issues in detail. With regard to ACTU repre­sentation on the board, why should the ACTU, as I have mentioned before, have 100 per cent of the employee representative positions on the board when only 41 per cent of public sector employees are in fact members of unions? This gives a completely inappropriate and privileged benefit to the union movement ahead of proper representation for the 59 per cent of public sector employees who choose not to be members of a union.

Defence superannuants should retain their representation of directors on the board due to the unique nature of military service and the defence community's special circum­stances. Why should the ACTU have more employee representatives on this board than the defence community? Currently the ACTU is able to nominate more directors than the Chief of the Defence Force. The defence and veteran communities believe that military representation on the board under this legislation should be at least equal to that of the ACTU or, alternatively, that the military should continue to have its own independent board. Why is it that the minister cannot dismiss an ACTU-nominated director? The legislation currently provides that the minister for finance cannot remove an ACTU-nominated director unless the president of the ACTU agrees. This is even in the case of misbehaviour, physical or mental incapacity or if the director is absent from multiple meetings of the board. That is an extraordinary position. It is an extra­ordinarily privileged position to be given to the ACTU and it is simply courtesy of the fact that the ACTU calls the shots with this government. Between the ACTU and the Greens, all of the decisions are made in the back room.

We know that Senator Cameron enjoys the positions adopted by the Greens much more than the positions adopted by his own Prime Minister. We know that because he said so. We know that Senator Cameron is very concerned about the fact that he is not allowed to speak his mind anymore inside the Labor caucus. We know that because he said so. Senator Cameron has told us about the problems with Labor senators 'getting a lobotomy' and 'becoming like zombies', not able to speak their minds. I am sure that he is going to be even more passionate in his defence of the union representation on this Commonwealth superannuation board, irrespective of the fact that they are not actually representative even of a majority of public sector employees.

The thing I really do not understand is that ACTU members, under this legislation and under the corporate governance arrange­ments set up by this Labor government, can prevent a quorum being reached. For some reason, the quorum under this legislation is said to be nine members. Nine members are needed at a board meeting for decisions to be made. That means that the three ACTU-nominated directors on their own can prevent a meeting from validly being held. Com­bined with the provisions preventing the minister from dismissing an ACTU-nominated director, this legislation gives the ACTU extraordinary powers and a completely inappropriate level of corporate governance control over Commonwealth superannuation funds.

I would say to Senator Feeney, through you, Madam Acting Deputy President, that this is not about an ideological hatred of unions. For example, in Victoria a couple of weeks ago, we had the circumstance of a mooted merger between Vision Super and Equipsuper. That merger was falling over. Why was it falling over? Because the union-nominated directors on one of the funds were concerned about the proposal for direct election of the board in the merged entity and they were concerned that there was no guarantee of nominated directors on the board of the new entity.

Superannuation fund trustees are supposed to act in the members' best interests. They have a fiduciary duty to act in the members' best interests. Yet the union representatives on that board, in making a decision to not support a merger going ahead on the basis of a lack of assurance there would be a continuation of union-nominated directors, were not acting in the best interests of their members; they were acting in direct and obvious self-interest, in the interests of the union movement. They were protecting their positions. So what is being done about this?

There is absolutely no guarantee under the arrangements being put in place that the interests of 59 per cent of public sector employees who are not members of a union will be properly looked after. The ACTU representatives on that board will have a vested interest in making the best possible arrangements for union members in public sector employment. This concept that somehow it is appropriate for 41 per cent of public sector employees to get 100 per cent of the employee representative positions on the board to be created under this legislation is extraordinary. There is no proper or rational explanation as to how that is in the public interest. The only explanation that we can reasonably come up with is that this government is captive to the directions of the union movement. They have told you that that is what they want. They are insisting on it. They say: 'Yeah, go ahead with this merger. Give us more power. Give us power over more of the Commonwealth super­annuation arrangements. Make sure that we can get on top of the military super so that we can get our hands into that. But don't dare weaken or dilute the influence that we have over the public sector superannuation arrangements, even though we represent less than half the superannuants that are being covered under this scheme.' I am talking about 41 per cent of current public sector employees. How many retired members would still be members of a union?

This is a government that is completely conflicted when it comes to putting forward recommendations around the corporate governance arrangements for Common­wealth super. This government should be embarrassed at the complete inapprop­riateness of this legislation they have put forward. But, the way things have been going over the last 12 months or so, it seems that this government does not get embarrassed about anything anymore. They are just pressing ahead to lock in as many advantages for the vested interests they represent in this chamber and in this parliament as they possibly can in the time that they have remaining in government. They want to make sure that as many vested interests as possible are locked in to legislation before the Australian people can formalise their loss of trust and confidence in this government—the serious betrayal that this government has imposed on them on things like the broken promise not to impose a carbon tax on them.

This legislation should not be supported by the Senate. I worry that, given the changed dynamics in the Senate that are around the corner, and given that the government now will have the majority and control of the Senate with the support of their alliance partners the Greens, I do not have much confidence that bad legislation like this will get proper scrutiny in the Senate as it would have done in the past. Sadly, the place for appropriate scrutiny of government legislation will no longer be the Senate; it will be the House of Repre­sentatives, because the government—not having a majority—will be able to make proposals, but ultimately it will come down to whether they are able to convince crossbench members of parliament to help them get legislation through the House of Representatives. In the Senate, I suspect the Greens will on various issues jump up and down and express concerns but in the end vote with the government no matter what. That is the way things will go in the Senate moving forward.

This is bad legislation. It is bad policy. It is completely self-interested—it is driven by a desire to institutionalise the vested interests of the Labor Party, acting as agents for the union movement. This legislation aims to entrench a corporate governance structure which gives 41 percent of public sector employees 100 percent of the employee representative positions on the board it will create. It will merge all the Commonwealth superannuation arrangements, including the military superannuation arrangements, into one organisation.

Of course, Labor senators get very touchy over all this. First we had Senator Feeney laughing and smiling, and now we have Senator Feeney and Senator Sherry talking loudly between themselves. They do not take this issue seriously. They probably feel embarrassed about the fact that they are putting legislation forward which is in the interests not of the public but of the ACTU and the broader union movement. They are probably embarrassed that they are here acting as the agents of the union movement, putting forward legislation that will entrench a seriously conflicted corporate governance structure, including military superannuation arrangements—a move which is, of course, entirely inappropriate—into the future. That is why we will move an amendment to seek to improve this very bad legislation; but we do not believe it will be passed. (Time expired)

Debate adjourned.