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Wednesday, 2 June 2010
Page: 4938


Mr RIPOLL (11:49 AM) —I have to say at the outset of this very important Governance of Australian Government Superannuation Schemes Bill 2010 and cognate bills that I am quite disappointed in the shadow minister and some of the grand rhetoric that he has put forward and some of the misleading words and views in terms of what this bill is about or, more broadly, military superannuation. As we all understand and know, these are big issues in the community, the military community and all of our electorates.

We all work very hard to make sure that our veterans’ community are well looked after, that all their entitlements are properly maintained and managed over a period of time and that any government looks after the best interests of our military personnel. We all support that. What I find offensive and wrong in these debates is when our military folk are used as political tools for an opposition that is in the business of opposing rather than looking at the substantive good work that has gone into the reforms that have been put forward here today in the bill before us. There is also the very simple fact that the extensive and wide consultation that has taken place was done with the military community and with ex-service organisations and has the full support of all of those organisations, including the RSL. That is a little yet important point I would have thought the shadow minister might have taken just a brief moment to talk about.

Who supports this bill and the reforms we are putting on the table? Military people do. Who opposes it? A bunch of opposition politicians do. I think that says a lot about the calibre and character of the people who oppose this in the House, like they oppose many other things. They oppose reform in the Medicare and health areas, they oppose reform in the stimulus packages, they oppose a whole range of other areas—very important infrastructure bills and so forth. I will not dwell on those points. I want to concentrate on some very important issues that are before us. I also make the point that these are complex matters for many people to deal with. It involves their retirement incomes and what is a very emotive issue for many people in the defence forces, particularly those who have retired or those who are retiring sometime in the future because of the benefits that they believe they are entitled to, and which they are entitled to—there is no question of that.

Everything this government has done in the 2½ years since it was elected has reflected the fact that we are looking to put the best interests of military personnel first, to improve the superannuation schemes that are available to them and to make those schemes reflect the 21st century and not the bygone eras of 20, 30 or 40 years ago. The commitments of past governments are no longer relevant when considering what military personnel should receive today. We are very committed to ensuring that military personnel have a proper, fair, equitable and indexed set of superannuation arrangements in place, and we are no less committed to modernising the government’s arrangements around military superannuation schemes. That is what these bills are about and that is what they do. They do it to improve efficiency, to ensure the sustainability and longevity of those schemes and to make sure that future governments are not caught out when it comes to what are in most cases ostensibly defined schemes where the liability is met by government out of consolidated revenue. It is a very important point that in the scheme proposed in these bills, as in any defined benefits scheme, the contributions going in do not necessarily accumulate to a point where they can fund the liability of the schemes; rather, these schemes are funded out of consolidated revenue by the taxpayer and the contributions made by military personnel. It is very important that we get the governance arrangements right, that these schemes are efficient and that they reflect the changing environment in superannuation.

I make a couple of other points before going to the specific details of a couple of other areas relating to superannuation. The shadow minister, the member for Cowper, raised these issues when he talked about the increase from nine per cent to 12 per cent, and again the opposition seem not to be supportive. Those opposite talk about the ACTU and how this legislation represents win for unions. I would have thought that it was a win for the people receiving it—ordinary people and workers. Unions do not receive the superannuation. The ACTU as a body does not receive the superannuation. The individual people—the mums and dads and the workers of this country who are the productive people creating the wealth in the economy—receive the suparannuation. It is not the ACTU that receives the superannuation but the workers. So I find it bizarre and offensive that those opposite come in here and say this legislation represents a big win for the ACTU or the unions. I think it is just ridiculous.

It is very important to note here that the superannuation system in this country—our national savings—was one of the biggest reasons why we went through the global financial crisis in better shape than did most other countries. We had this really great and sound fundamental base, and I think that important point is lost on those opposite. Making governance improvements and efficiencies and pulling these schemes together under a single trustee body is the right direction to go. I did hear the shadow minister saying that it was the right direction. Of course it is, and for that reason alone the opposition should be supporting these bills rather than going off at tangents about the control of superannuation, a subject I will come back to.

The community, though, certainly understands that the Labor Party is the architect of superannuation in this country. That big step forward in superannuation reform was a brave move. If you look back 20-plus years from now, you will see the benefits of that, and here we are again with some simple and straightforward though involved reforms on which you would at least expect the opposition to come on board. These reforms are not about politics; they are about military personnel having a win and the best possible arrangements the government can find. The government has gone through an extensive consultation process and had a lot of work done to make sure that it is robust and sound and about proper governance, which are all things that this country is renowned for. So I find it completely odd that the opposition oppose this.

Perhaps they are a little bit embarrassed that the government has done more in 2½ years than they did in 12 years—perhaps it is as simple as that. There has been more reform and more good things done on issues of concern to military personnel in the 2½ years that we have been in government than there were in the 12 years that the Howard government was in control. I highlight that point because it relates directly to military superannuation. When the Podger review—which was commissioned and done under the Howard government—was finished and the report delivered, the Howard government refused to release it. We made a commitment in opposition that, should we be elected, we would release that report, and we have done that. I think it needs to be noted that, while the other side put together that review, they would not allow it to become a public document and we did.

These bills go to a range of very important matters. They aim to modernise the government’s arrangements in the Commonwealth military superannuation schemes without altering those schemes—and this is another point that has been missed by the opposition—or altering the entitlements of members under those schemes. They are retained in full. The purpose of these bills is to follow through on government decisions that were made in 2008 and 2009 to merge the existing trustees of the main Commonwealth civilian and military superannuation schemes to form one single trustee body, which is the correct way forward.

The changes that these bills make to both the government’s framework and the administrative arrangements for these schemes will make the system more efficient. There are cost savings in making them, and those savings can be passed onto the beneficiaries of those schemes, be they civilian employees of the Commonwealth or military personnel. The bills are about improving efficiency and improving the management of the schemes. They will allow the benefits of the improvements to flow through to everybody involved in those schemes. It is well understood—it is a matter of fact—that small superannuation schemes are less efficient than larger schemes. With Jeremy Cooper doing his review of superannuation, it is also clear that the movement towards larger superannuation schemes is part of the operation of a better system. It protects members, gives them higher efficiencies and better governance and means that they get higher returns from those schemes.

While consideration was given to a single trustee body in the arrangements put forward in this bill, the greatest degree of consideration was given to the unique nature of military service and military personnel. The bills should not be treated as though they were put together only in the light of superannuation and then tacked on without consideration of the unique nature of military service and military personnel when they were in fact put together in the opposite way. They were put together to look very specifically at how we preserve, maintain, improve and enhance the schemes for military personnel as well as for people from Commonwealth civilian services. This government would not have set about this process without that being a primary focus and without ensuring that it was the focus by undertaking wide-ranging consultation.

These amendments complement the existing features of military superannuation and reflect the special nature of military service. They are completely consistent with the views that have been put forward by military stakeholders, including, as I said at the outset, key ex-service organisations and their members. The unions of military personnel have been consulted and have been supportive. So again it is another big win for military personnel. They are the beneficiaries, not their representative bodies or the unions that represent them.

The amendments affect the process for nomination of directors, amongst a range of other things, as you would expect for a governing body under a single trustee. The governing board of the Commonwealth Superannuation Corporation, the CSC, will consider matters that relate solely to the military schemes and there is a special provision made to ensure integrity around its operations. In particular, the consolidation of the scheme funds will allow members of the Military Superannuation and Benefits Scheme, who comprise the bulk of the serving Defence Force personnel, to gain substantial benefits from the merger.

As I said earlier, industry experience has shown that size does matter—it matters a lot—when it comes to superannuation. By bringing these together you combine what are essentially very small schemes, almost boutique schemes in some cases, into a much larger, much more robust and fundamentally sound system without changing the schemes themselves. This brings on board the weight of confidence that is created in going from 50,000 or 60,000 members, as in one particular scheme, to 650,000 members—that weight of support of having all those members in those schemes.

The merger will bring more than 650,000 members together for the first time under one trustee. This will mean that there will be around $19 billion of funds under this new body. That is a much more workable number in terms of governance and efficiency, and this is enhanced by having a large superannuation governing board. It is not about changing the schemes; the particular features and benefits of the schemes remain the same. I cannot stress that enough because I know for a fact that the opposition will go out there, as they have in other areas, and mislead people about the benefits, the entitlements and the governance provided for in the bill and the outcomes of the amendments. We just heard it from the shadow minister. He just came in here and told everybody, straight out, that the opposition are going to oppose these very good reforms that are supported by the military. They are going to oppose them because it suits their political agenda to do so; unfortunately, military and ex-military personnel will have to pay the price, as will Commonwealth civilian personnel.

These bills were developed with a particular priority of maintaining and protecting the features of those military superannuation schemes. As I have said—I cannot say it enough in this debate—specific additional issues were raised, considered and dealt with by key ex-service organisations, including the Returned and Services League. We have evidence of a strong commitment to recognise that unique military service and we have the backing of those organisations.

The amendments make changes to a range of things. I took particular note of what the shadow minister was saying and his concerns about the powers of the Minister for Finance and Deregulation or perhaps the Chief of the Defence Force and others who are members of the board. The reality is that the finance minister can only make certain changes if he consults with the Minister for Defence in relation to the appointment and termination of employer directors on the board. I do not see how anybody could argue against the finance minister having to consult. I would have thought that consultation with the defence minister in relation to specific appointees to the board is the sort of shared power you would want in a military superannuation scheme. I think that is a worthy aim. If this provision were not included in the legislation, I bet you anything you like that the opposition would come in here and say, ‘There’s no consultation by the government. They’re wielding power. They’re going to do this of their own volition and not consult with anybody.’ We actually are consulting. The finance minister must consult with the defence minister, which is a very sound move. Having more insight and expertise in the area of defence, the defence minister should be consulted by the finance minister in these very important matters.

The changes go a few steps further. The Chief of the Defence Force also needs to consult with one or more relevant organisations in nominating member directors for appointment to the board—so there is another consultation process that needs to take place. These relevant organisations include organisations that promote the interests of the beneficiaries under the scheme, such as the RSL and other service and ex-service organisations. We have ensured that that consultation process involves not just the executive of government but also the executive of defence and the representative bodies of serving and ex-service personnel. That is the right way forward—these are the sorts of consultation processes needed to improve the system.

We also ensure that there is a requirement for at least one of the employee directors nominated by the Chief of the Defence Force to be present when the board is deliberating on an issue that relates to military schemes, which is an arrangement that does not exist at present. This is to ensure that they cannot be excluded and that the voice of the military is always present—it must be present.

I cannot understand the kind of waffle that we got from the shadow minister about how the military voice would somehow not be there when the military voice is clearly there through the Chief of the Defence Force, the structure of the board and the consultation process, as well as ensuring that at least one of those board members must be present in relation to any issue that relates to the military schemes, and also a change to the membership of the dedicated defence committee to prescribe to the chair of that committee that one of the directors also be on the board of the CSC. So not only is that taking place at a broader level but specifically on the board for the military superannuation schemes.

These are consistent changes to what takes place in the broader community and what takes place in Commonwealth Public Service superannuation schemes and are reflective of best practice. They are reflective of the best opportunity for military personnel to maintain and improve their access to superannuation and also their termination payments, to make sure that those are the maximum they possibly can be under the schemes. There are also a number of technical matters, but, having dealt with the substantive matters, I will leave the technical matters to one side.

Unfortunately, and also a bit sadly, there has been a misinformation campaign by some in the community about changes to superannuation and the old DFRB Scheme, the DFRDB Scheme and the more recent MSB scheme. I just want to make a couple of quick notes. One is that none of those schemes have disappeared. While there are no new entrants into those schemes, they still exist for those people who are members of those schemes. The issues that are being raised in a number of forums are misleading and are not based on fact. The government has gone to some lengths with the best interests of the military—serving and ex-military—personnel at heart and will continue—(Time expired)