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Tuesday, 14 August 2012
Page: 5199


Senator FARRELL (South AustraliaParliamentary Secretary for Sustainability and Urban Water) (18:09): I hate to disappoint Senator Cormann, but the government is not prepared to—

Senator Cormann: No kidding!

Senator FARRELL: No kidding, Senator Cormann. The government does not believe that this is an appropriate amendment. We reject the suggestion that the scale test that this legislation applies is different from the one recommended by the Cooper review.

Senator Cormann: I've just quoted—

Senator FARRELL: I know what you said, Senator, but my understanding is that in substance the test is the same.

Senator Cormann: That is just not true.

Senator FARRELL: We will have to agree to disagree, Senator Cormann, because my understanding—and the information I have been given in respect of this—is that in substance the test—

Senator Cormann: Based on your thorough reading of the review!

Senator FARRELL: Based on the information I have been provided by the very competent people who have been dealing with this issue in the lower House and who are now advising me in the Senate. The suggestion in your amendment is that this is an underhand way of trying to push smaller funds out of the market or to stop new funds from coming into the market.

Senator Cormann: That's exactly what I'm suggesting.

Senator FARRELL: We reject that. This bill, and this particular part of the legislation, is not about 'bigger is always better'. There is no dollar value that creates an impediment to new superannuation funds. The bill does not impose a minimum size on a fund and nor does it force smaller funds into mergers. In fact, in recent times it has almost gone the other way, and some of the big funds have not merged. There is almost a push to maintain the current number of funds. This legislation requires that MySuper trustees on an annual basis specifically focus on whether there is any lack of scale that is disadvantaging their members. They do not have to be a particular size, they do not have to have a particular amount of money, but they just have to pose the question. Having been a trustee of a super fund for 15 years, I do not think that this is an unreasonable requirement. I certainly would not see this as an impediment to the continuation of the fund that I was a trustee of, and I would not see it as an impediment to any new fund entering the field.

It is not intended that trustees will be required to make detailed comparisons of their performance against every other fund in the market, and it is expected that many well-performing funds will also be able to readily determine that their members are not being disadvantaged due to insufficient scale. Contrary to the implication in Senator Cormann's amendment, this legislation clearly allows for small, well-performing funds for which scale is not a barrier to performance to continue serving their members as they have always done. I personally have been a supporter of those small funds—if you like, 'boutique funds'—which provide good superannuation entitlements to their members. I think that is a good way to work. I do not think this legislation does what Senator Cormann says it does, and the government does not support the amendment.

The CHAIRMAN: The question is that the amendment moved by Senator Cormann on sheet 7199 be agreed to.

The CHAIRMAN: The question now is that the bill stand as printed.

Question agreed to.

Bill reported without amendments; report adopted.

Bill read a second time.