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Thursday, 4 February 2010
Page: 405

Mr TANNER (Minister for Finance and Deregulation) (9:01 AM) —I move:

That this bill be now read a second time.

The Governance of Australian Government Superannuation Schemes Bill 2010 (the bill) is part of a package of bills to establish governance arrangements for Commonwealth superannuation schemes that are effective and consistent with those in the broader superannuation industry. The package of bills also modernises some aspects of Commonwealth superannuation arrangements without altering members’ entitlements.

The bill gives effect to the government’s announcement, in October 2008, to merge the trustees for the main civilian and military superannuation schemes—that is, the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority—to form a single trustee body from 1 July 2010.

The single trustee will become responsible for managing the main civilian and military superannuation schemes. These schemes are the:

  • Commonwealth Superannuation Scheme;
  • Public Sector Superannuation Scheme;
  • Public Sector Superannuation Accumulation Plan;
  • Military Superannuation and Benefits Scheme;
  • Defence Force Retirement and Death Benefits Scheme; and
  • Defence Forces Retirement Benefits Scheme.

The single trustee will also assume responsibility for the superannuation scheme established by the Superannuation Act 1922 and the Papua New Guinea Scheme from the Commissioner for Superannuation, which the ComSuper Bill 2010, being introduced cognately with this bill, seeks to abolish with effect from 1 July 2010.

Establishing a single trustee for the military and civilian superannuation schemes will not affect, in any way, ministerial responsibility for defence superannuation policy and arrangements. This responsibility will remain with ministers in the defence portfolio. As such, ministers in the defence portfolio will continue to be responsible for any future policy changes regarding military superannuation.

The merger of the existing trustees is aimed at strengthening the governance of Commonwealth superannuation schemes and providing efficiencies in trustee operations in line with trends across the superannuation industry generally.

Based on figures reported as at 30 June 2009, the merger will bring more than 650,000 members and pensioners and nearly $19 billion in funds under the management of the single trustee body. This will provide an opportunity for increased scale of operations and for more effective and streamlined investment operations. It will also help to attract and retain quality board members and staff and provide access to higher levels of service from providers and greater options for investment of fund moneys.

These outcomes will benefit members as well as the Commonwealth as the employer sponsor of the schemes, and will provide a more sustainable basis for delivering Commonwealth superannuation in the future.

As I have already indicated, establishing the single trustee for the military and civilian superannuation schemes will not change or affect, in any way, the superannuation benefits of members of the schemes. This means, for example, that the existing features and benefits that reflect the special nature of military service in the Australian Defence Force, such as death and disability arrangements, will be maintained.

The bill establishes the Commonwealth Superannuation Corporation (CSC) as the single trustee by continuing in existence the body corporate formerly known as the Australian Reward Investment Alliance.

Under the bill, CSC will be a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997 (CAC Act). The CAC Act will apply to CSC subject to some modifications with regard to managing and investing scheme funds. For example, CSC will not be required to notify significant events related to these activities to the responsible minister. This modification reflects the fact that CSC will separately be subject to prudential supervision under the Superannuation Industry (Supervision) Act 1993.

The bill also provides that CSC will have a governing board comprising a chair and 10 directors, who will be appointed on a part-time basis. The board size reflects the increased responsibility of the trustee and more diverse membership of the schemes that fall under the management of CSC.

Both military and civilian interests will be represented on the board of CSC. The Chief of the Defence Force will be responsible for nominating two employee representatives and I will consult the ministers in the defence portfolio on suitable candidates for the five employer representative positions.

CSC will also be able to establish committees to deal with specific issues, including those related to the schemes for Australian Defence Force members, such as the payment of disability and death benefits. For example, CSC can establish a dedicated Defence Force case assessment committee, with representation from each of the three services. This will allow for the continuation of the current role and function of the DFRDB Authority within the framework of the single trustee.

Many of the remaining provisions in the bill are to continue governance arrangements that apply to the existing trustees.

The bill is a testament to the government’s commitment to maintaining strong, contemporary governance arrangements for Commonwealth superannuation schemes that are beneficial to members and the Commonwealth.

I commend the bill to the House.

Debate (on motion by Mr Coulton) adjourned.