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Wednesday, 2 June 2010
Page: 4934

Mr HARTSUYKER (11:36 AM) —I welcome the opportunity to speak on the Governance of Australian Government Superannuation Schemes Bill 2010, the ComSuper Bill 2010 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2010. These three bills taken together seek to merge three trustee boards and authorities into a body which will then become the trustee of the main civilian and military superannuation schemes. The boards which will be amalgamated concern the Australian Reward Investment Alliance board, for civilian schemes; the Defence Force Retirement and Death Benefits Authority; and the Defence Forces Retirement Benefits Scheme, which is administered by the Military Superannuation and Benefits Scheme board, for military schemes. The particular schemes to be administered by the new body include the Commonwealth Superannuation Scheme; the Public Sector Superannuation Scheme; the Public Sector Superannuation Accumulation Plan; the scheme provided for under the Papua New Guinea Staffing Assistance Act; the Defence Forces Retirement Benefits Scheme; the Defence Forces Retirement and Death Benefits Scheme; the Military Superannuation and Benefits Scheme; and, finally, the scheme established under the Superannuation Act 1922. These schemes will be amalgamated into the Commonwealth Superannuation Corporation, which is established by the governance bill and which will operate as a body corporate with a separate legal identity from the Commonwealth. The ComSuper Bill establishes ComSuper as a prescribed agency under the Financial Management and Accountability Act and as a statutory agency under the Public Service Act.

The government is introducing these bills to find efficiencies in the management of government administered superannuation schemes. The amalgamation of all Commonwealth civilian and military superannuation boards is intended to provide administrative efficiencies, as well as secure financial gains through the amalgamation of all investment funds. The total amount for investment across the funds is approximately $19 billion. This includes $16 billion which is currently managed by the ARIA board and $3 billion which is managed by the MSBS board. It is estimated that an additional $10 million per annum will be generated due to the type and size of the amalgamated investment funds and the opportunity to consolidate investments.

The bills stipulate that the board of the Commonwealth Superannuation Corporation shall consist of 10 members and a chair, five of which will be appointed by the minister for finance, three of which will be appointed by the President of the Australian Council of Trade Unions and two of which will be appointed by the Chief of the Defence Force. Here lies the first problem that the coalition has with this legislation. Why should the President of the ACTU be allowed to nominate three members of the board of ComSuper governance? The last time I checked the ACTU was not a government body and the President of the ACTU was not employed by the Commonwealth. Whereas decisions made by the minister for finance and the Chief of the Defence Force can be held to account in the parliament, the President of the ACTU seems to be able to appoint any person to the board without any oversight whatsoever. Clause 10(4) prevents the minister from questioning the decision of the ACTU President in making an appointment. The explanatory memorandum explains that it is not intended that the minister have any obligation to satisfy himself or herself that the appointment has been properly made. Clauses 16(5) and 16(6) go even further. These clauses prevent the minister for finance from dismissing an appointment made by the President of the ACTU without first receiving permission from the ACTU.

The bills list a number of reasons why a board member can be dismissed. These include misbehaviour or physical or mental incapacity; or if a director becomes bankrupt; or if a director fails to attend three consecutive board meetings and does not have a leave of absence; or if a director does not disclose interests to the board. So we could have a mentally incapacitated, bankrupt director who cannot be sacked by the minister for finance because the ACTU President will not allow the dismissal. This creates the extraordinary situation where the minister for finance cannot overrule the ACTU President on board member decisions. When did the ACTU President become more important in managing Australia’s financial investments than the minister for finance? What happens if the ACTU President disagrees with the minister for finance? The bills contain no measures whereby such a conflict can be managed, although, the department of finance explicitly stated to the Senate inquiry that the minister can only remove a board member with the ACTU President’s permission.

This is an important point because we know that this government has some differences of opinion with the ACTU from time to time. For instance, I refer to comments in February this year by ACTU President, Sharan Burrow, who reiterated the ACTU’s long campaign to increase the superannuation guarantee and called on the government to increase the super guarantee rate to 12 per cent by 2012. Now let us contrast those comments with the position of the Prime Minister and of the former minister for superannuation, Senator Sherry, before and after the 2007 election. The Prime Minister told Radio 4BC in Brisbane before the election that he would not make any changes to super—‘not one jot, one tittle’. This was followed by remarks from Senator Sherry, who said:

We won’t be increasing the nine per cent superannuation guarantee for a number of reasons. I’ve said time and time again at many conferences to many people in the financial services sector, privately and publicly, that nine per cent is enough from the employer, it would be unfair to increase that nine per cent any further and we won’t be doing it.

The then minister for superannuation, Senator Sherry, also had this to say after the election in March 2008:

The 9 per cent superannuation guarantee contribution that employers pay for their employees—again, we’ve committed that we could not increase that and increase the payment burden on employers.

But, as we all know, in the 2010 budget the government listened to union demands and decided to increase the superannuation guarantee to 12 per cent. Senator Sherry is right: the policy certainly will be a burden on employers. It will increase payroll costs by around $20 billion per year when the 12 per cent is phased in. This includes around $10 billion from the two million small businesses in Australia. But the ACTU are not famous for considering the interests of small businesses over union interests. Here is what the ACTU’s secretary, Jeff Lawrence, said about the government’s policy:

“The pathway to a 12 per cent superannuation guarantee is a big win for … Australian unions …”

So when it comes to superannuation policy, the government does not listen to the former minister’s commitments. It does not listen to the Prime Minister’s commitments. It does not even listen to the recommendation from its own Henry review, which specially recommended against lifting the superannuation guarantee. Instead, the government listens to an ACTU campaign. And these bills formalise that position. They prevent the minister for finance from overruling the ACTU President with regard to the ComSuper board. This is an unacceptable position. No wonder the defence community want their own administrative board for superannuation when this government has been proven to be so incompetent at managing superannuation policy and has been putting the ACTU’s interests ahead of commitments by the Prime Minister and the former minister for superannuation.

Since these bills were released for comment, the veteran community has argued very strongly that the amalgamation of all civilian and military Commonwealth superannuation boards will have negative consequences on the future of military superannuation schemes. A Senate inquiry on these pieces of legislation reported on Monday, 15 March and allowed the defence community to voice their anger at the proposals. The Defence Force Welfare Association submitted to the inquiry that it strongly contends:

… military superannuation schemes require a board and management structure that is separate from, and is seen to be separate from, Board and management structures applying to the Commonwealth’s civilian superannuation schemes. The proposed Board merger will seriously disadvantage military superannuation contributors and beneficiaries and, in turn, the wider Australian community because: The unique conditions of military service will be subordinated to, and subsumed by, civilian conditions of service even though the two are fundamentally and materially different.

The Australian Veterans and Defence Services Council Inc. said:

There is not now in the government function the interest that came with earlier parliaments … with people who had the experience to be able to recognise the uniqueness of military service and therefore had an objective approach to military superannuation as a feature of conditions of service.

The coalition agrees that military superannuation is unique. As my colleague the shadow minister for Defence Science and Personnel will explain, military superannuation is offered as part of a broad remuneration of Australia’s defence personnel. The defence community believes that these bills are another step that will erode the unique position given to military superannuation.

Military personnel make a huge sacrifice for the Australian people and they deserve to be rewarded through a generous and unique superannuation scheme that provides for them in retirement. The defence community should be rewarded and not punished. The amalgamated superannuation board will allow the Chief of the Defence Force to choose two board members, compared to the ACTU’s three. What this government is effectively telling the defence community is that they are less important than the ACTU, and the ACTU has appointed board members who will have more say on the unique position of military superannuation than the defence force members. The coalition agrees with the defence community. It is an outrageous proposition that the ACTU should have more say on the management of military superannuation than the Department of Defence.

Furthermore, the proposals will require a quorum to be formed by a board consisting of nine of the 11 members. The coalition is concerned that the three ACTU appointed board members could prevent a meeting from taking place merely by refusing to attend the board meeting. The ACTU could hold the board to ransom if ever an issue were to arise that the ACTU disagreed with. This is unacceptable. The coalition will not support these bills as they are currently drafted.

The coalition concurs with many from the defence community who believe that that the Defence Force Retirement and Death Benefits Authority, the Defence Forces Retirement Benefits Scheme, and the Military Superannuation and Benefits Scheme should be amalgamated under one board. However, this board should remain separate from the administration of civilian superannuation. The amalgamated military board should have oversight and control of all matters relating to the management of military superannuation schemes. It is appropriate that the military and civilian boards have a common chairperson, but no person can be appointed as a director on both the civilian and military boards concurrently. Importantly, the veteran community needs to be represented on the military board.

Any board should contain a sunset clause so that the operation of the two boards can be reviewed after either three or five years to ensure that the interests of both military and civilian persons are being managed appropriately and in their best interests. The bill should also ensure that the Minister for Finance and Deregulation always has the final say over decisions made by the ACTU president with regards to board membership. The coalition cannot support these bills in their current form and will be looking to introduce amendments in the Senate.