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Wednesday, 7 December 1983
Page: 3414


Mr DAWKINS (Minister for Finance) —by leave-The Auditor-General's report on the financial statements of the Superannuation Fund Investment Trust deals with matters primarily of a technical nature. Corrective action has already been taken on one of these. The remaining matters, some of which deal with accounting policies that have previously been given full and careful consideration, will be further examined in the light of the Auditor-General's observations. The further report deals with the performance of the Trust in relation to certain investment transactions. The report expresses concern about some aspects of the Trust's performance. It concludes by stating:

. . . there may even be indications of an element of recklessness in the way that some of the decisions to incur expenditure or to undertake investments were reached.

However, the report goes on to say:

Whether any such indications would persist given a fuller knowledge and understanding of all the relevant facts and circumstances is a question that could be answered only after a more detailed examination than it has been possible to carry out in the course of the Audit.

The Auditor-General has nevertheless observed that the opinion he has formed is not calling into question the soundness of the investment decisions made. The Chairman of the Superannuation Fund Investment Trust has provided me with a letter in answer to the points raised by the Auditor-General. I have not come to any conclusion about those actions of the Trust which are the subject of the Auditor-General's report. Contributions made by members of the Commonwealth superannuation scheme and income earned from the investment of those contributions are held in the Superannuation Fund and are used to finance the employee-financed share of benefits payable under the scheme.

The income of the Fund is itself a very important element in the benefits which contributors receive. If members of the scheme are to receive more than a minimum return on their contributions it is necessary that the Trust should be able to invest with regard to expected return as well as to security. With this in mind, it would not be appropriate for the Trust to confine its investments to those that guarantee absolute security. At the same time, it must be expected that the management of the Fund will reflect a high standard of care and prudence, and a due regard for the overall security of the Fund's investments. In maintaining a proper balance between these different considerations the Trust must often face a difficult task. Nevertheless, the Government and the contributors are entitled to be assured that it is being carried out carefully and prudently.

The matters raised in the further report of the Auditor-General will need to be thoroughly examined. The Government will give early attention to the manner in which this examination is to be undertaken. The Chairman has offered to stand aside as Chairman while the examination proceeds. However, the Trust is currently engaged in complex investment activities and proposals. Resignations and retirements from the Trust this year have left the Chairman as the only member of the Trust with more than recent acquaintance with the investments concerned. The continuing conduct of these matters, which are significant to the interests of contributors, could be made more difficult if the knowledge and experience of the Chairman in regard to them was not available in the deliberations of the Trust.

It has therefore been decided that the Chairman will take leave of absence from his present position during the examination, but will continue to serve the Trust in the capacity of an ordinary member of the trust. The Commissioner for Superannuation, who has acted since July 1983 as a member of the Trust while consultations related to filling of current vacancies on the Trust proceeded, will continue to do so. The appointment of a third member of the Trust is under urgent consideration. I shall of course inform the House further on the matters raised by the Auditor-General after the conclusion of the examination.