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Monday, 20 June 2011
Page: 3337


Senator PRATT (Western Australia) (21:04): I am very proud of Australia's record on superannuation—Labor's record, the labour movement's record and the Gillard government's record—but it is not something we can sit still on. We must make sure Australia has a well run superannuation system so that Australians have sustainable retirement incomes today and into the future.

While we have a good system, it does require some further change, some further tweaking, lest members miss out on the benefits they should be getting because government has not been paying close enough attention to how the system can be improved and better operate. Labor is paying attention but the coalition is not.

In these bills before us we are paying particular attention to improving the govern­ance of the superannuation arrangements of those who serve our nation as public servants or defence personnel. It is but one part of a much bigger platform on which the Labor government's agenda on superannuation rests. Tonight it is about improving and modernising the governance arrangements for the main Commonwealth civilian and military superannuation schemes.

The bills before us give effect to the government's announcement, back in 2008, that it would merge the trustees for the Commonwealth's main civilian and military superannuation schemes—that is, the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board of Trustees and the Defence Force Retirement and Death Benefits Authority to form a single trustee body. There are important reasons for doing this. The government merged these civilian and military trustees with the aim of improving member benefits and service levels. The bills before us bring together a number of civilian and military superannuation schemes coming under a single trustee. I will not read the very long list to you, because I know that has been done before, but I think it is of significance to note that the bill does not impact on the design of the schemes or on members' entitlements, which are protected by separate scheme legislation that cannot be changed by this new trustee. Changes to these entitlements would require legislative action—and rightly so, because it is very important that this legislation and this parliament recognise the unique nature of military service in the Australian Defence Force. We should not contemplate changes to these entitlements without the consent of parliament and recognition of the sacrifices made by the men and women who serve in our defence forces. In other words, parliament should not separate itself from the sacrifices made by our defence personnel and from contemplating the needs of their dependants should they be killed or disabled as a result of their service to our nation. Because of this, there is no change to the existing features and benefits that reflect the unique nature of military service in the Australian Defence Force, such as death and disability arrangements. It is important that there is no change to these arrangements.

Recognition of the unique nature of military service includes a requirement for CSC to have regard to these important issues as set out in the relevant military superannuation legislation. Tonight I would like to acknowledge the ex-service com­munity for their dedication to representing and advocating for the interests of their members on these important issues.

It is important to place in the hands of a single trustee the capacity to consolidate scheme funds, pro­viding the opportunity to access increased benefits of scale. By doing this we should see access to improved service levels and, importantly, improved investment opportunities. It should also allow members of all the schemes to benefit, through lower investment costs and higher investment returns. This is the stuff that Aust­ralian superannuation is all about—good, long-term financial investments for members, the leveraging of scale, and good investment decisions and risk manage­ment. I am pleased that the Members of the Military Superannuation and Benefits Scheme will be set to gain substantial benefits from this consolidation of schemes.

The Defence superannuation scheme has just over $3 billion in assets, whereas the civilian superannuation scheme has some $18 billion under management. We can see from past industry experience in super­annuation that members of smaller superannuation schemes are able to look forward to gains when their scheme funds are consolidated into a larger pool. Consolidation gives smaller schemes much more investment leverage. That is the opportunity that the legislation before us tonight presents. Members of this consolidated scheme will also ultimately benefit from a highly skilled and innovative trustee being responsible for the scheme. It is also important to note that public sector super will increase its presence in the superannuation industry by becoming a larger and less divided fund. It will be able to operate more strategically in the interests of its members and attract quality and experienced staff and board members.

The senators opposite choose to challenge the quality of those board members, with which I disagree. The union movement has underpinned good industry superannuation funds in this nation for many years. The board will have 11 members, and both military and civilian interests will be represented. In this sense the board is very similar to many other industry super­annuation boards, which include repre­sentatives from the industries in which its members work. The Chief of the Defence Force will be responsible for nominating two member directors, three member directors will be nominated by the President of the ACTU, and there will be consultation between finance and defence ministers on suitable candidates for the five employer director positions.

So it is clear—and we have had many examples of this from speakers opposite—that the key reason the coalition is so opposed to this legislation is union involvement in the board. The simple fact is that unions and the labour movement have been key drivers of the creation of a superannuation system that serves all Australians, not just a privileged few. Super­annuation used to be for a privileged few. But now, thanks to Labor's ongoing com­mitment to good superannuation, millions of Australians can enjoy a much higher standard of living and a far more secure future. Key to delivering this outcome has been the invol­­vement of unions advocating for their members and combining financial savvy with knowledge of their members' needs.

We have had an ideological attack from senators opposite on this legislation, based on the fact that not all workers are members of unions. This is completely beside the point, as unions have brought good corporate governance to superannuation, and they have done this successfully because they are there to serve their members, just as a good superannuation fund should do. So there will be representatives on the superannuation fund serving the whole of the membership. They do not have a narrow membership base. They will be on the board to represent all members of the fund. They will not be driven by their own financial reward but by reward for members. Industry super­annuation funds have served their members very well and will continue to do so. I believe we will see a good example of that in the fund proposed by the legislation before us tonight.

It is very important that the government do the right thing by our public servants and its serving defence force men and women. Tonight we have an opportunity to improve superannuation benefits for the majority of people in uniform in our country. However, in contrast, the opposition in this parliament are opposing a set of bills that would increase the take-home superannuation of over 90 per cent of our serving members. It is a crying shame.

By 2050, one in four Australians will be over 65. We know that longer term challenges such as the ageing of our popula­tion, as well as recent events of the global financial crisis, underscore the need for Australians to have access to quality superannuation schemes and a secure financial retirement beyond pensions. Tonight, we have an opportunity to make a small contribution to the good governance of such superannuation programs and I commend the bills to the Senate.