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Monday, 20 June 2011
Page: 3330


Senator BUSHBY (TasmaniaDeputy Opposition Whip in the Senate) (20:36): I rise tonight to contribute to the debate on the ComSuper Bill 2011 and the Governance of Australian Government Superannuation Schemes Bill 2011. This package of bills is intended to effect a number of changes. Primarily, it will amalgamate all military and civilian Commonwealth superannuation funds; it will merge 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, to be known as the Commonwealth Superannuation Corporation, or CSC; it will establish ComSuper as a statutory agency providing administrative services to CSC; and it will introduce consequential and transitional provisions to facilitate the merger.

These bills were first introduced in a slightly different form in early 2010 and were subsequently amended to slightly improve the board appointment process, following the inquiry by the Senate's Finance and Public Administration Committee. I might add here that, as a member of that inquiry, the small amendment made shows what an effective tool this place's committee system is, but I note that the coalition's dissenting report highlighted far more issues with these bills than were reflected by the small amendments conceded by the government. The amendments conceded by the government included requiring consultation with the Minister for Defence on employer board appointments and requiring that at least one Chief of the Defence Force, or CDF, nominated director be present where a reduced quorum is acceptable and when issues to be discussed relate only to military superannuation.

Although these amendments improved the bills, the bills still contain a lot of bad policy and, in my view, remain unsupportable. This is because the bills still contain provisions which make them unacceptable to the defence and veteran communities and still give excessive power to the ACTU with respect to appointments of CSC directors, termination of CSC directors and quorum arrangements for board meetings.

The government asserts that these bills have been introduced to reform the super­annuation industry by consolidating 650,000 members and pensioners under a single trustee board and establish a greater pool of assets for investment purposes. When first introduced early last year, the then Minister for Finance and Deregulation, Lindsay Tanner, stated:

The introduction of these changes reflects the ongoing work within the Government to review and where necessary, reform its own business operations, internal governance and structures just like anybody else.

However, when the consequent reform involves decisions that distort the operation of the board that will govern the newly amalgamated funds, effectively handing the ACTU excessive power to make appointments and excessive voting rights at meetings, the question must be asked: what is the purpose of the changes?

Certainly, it is hard to see a lot of demonstrable benefit in these bills and this question was also asked by the witnesses to the inquiry. The RSL submitted:

… assertions about prospective improvements resulting from the proposed merger are not substantiated;

Further:

A review of the four sources of information about the proposed merger of the superannuation boards made available to the RSL has failed to find any factually based reason why the merger must take place.

And again:

There were lots of reassuring words … but no hard facts backing up the need for change.

In its submission, the Defence Force Welfare Association stated:

Noting that the Government chose not to consult with DFWA or other Ex-Service Organisations on this issue, DFWA can find no evidence of any benefit, tangible or intangible, to serving or former members of the ADF. Nor can DFWA identify any material or financial benefit to the wider Australian community.

I tend to agree that the government has failed to clear two hurdles regarding the demonstrable benefit these bills will deliver. They are, firstly: it has specifically failed to demonstrate the value of the amalgamation proposal to military and veteran super­annuants and beneficiaries; and, secondly, it has generally failed to demonstrate the need for this amalgamation to the wider com­munity, many of whom share the concerns raised by the veterans groups.

I, along with other coalition senators, share the concerns of affected groups and remain to be convinced of the benefit of amalgamating the management boards of military and other forms of Commonwealth superannuation. As already mentioned, coalition senators and I do not consider that the interests of serving and former ADF members are well served by the proposed board composition of the Commonwealth Superannuation Corporation and the way its quorum provisions play out.

These concerns revolve primarily around the relative reduction in the proportion of military and ex-military interests. This concern was echoed in evidence given to the committee by the Returned and Services League, and I quote Rear Admiral Doolan:

Prima facie, if you are increasing the number of board members and you are decreasing the percentage of military representatives on the board, then the military voice must be more muted.

Similarly, at the hearing into the bills, the national president of the DFWA stated:

… the representation on that board will not give adequate voice to the military superannuants, whether they are contributing members or recipient members.

This flaw in the bills is exacerbated by the proposal for the Australian Council of Trade Unions to have the power to appoint three members of the new board, as opposed to only two coming from the military com­munity. Indeed, coalition senators do not support the provisions relating to the role of the ACTU in this bill and will move amendments in that regard.

It is my view that the bills should contain no special provision for ACTU repre­sentation on the board. Rather, board mem­bers should be appointed by the minister for finance, other than the two representatives who should come from a defence background to reflect the unique nature of military service and the defence community's special circumstances. Even to the extent that the ACTU is provided special board repre­sentation, concerns are held about the fact that it can appoint three CSC board members, whilst the CDF is only able to appoint two. If the ACTU is to be given special representation, it should be no more than that given to the defence and veteran community—or, preferably, the military should continue to have its own independent board.

Inexplicably, under these bills, once a director has been appointed by the ACTU, that person can only be dismissed or removed by the ACTU. Even in the case of misbehaviour, physical or mental incapacity, or where the director in question is a habitual no-show to meetings, the minister cannot remove such an ACTU appointed director unless the president of the ACTU agrees. Contrast this with the ability of the minister to remove the five proposed employer directors for any of those reasons and it is clear that such a provision is unacceptable as it gives the president of the ACTU more power over the relevant directors than the responsible minister.

Another concern is the possibility of the ACTU members preventing a quorum, despite some amendments designed to lessen this risk. However, it remains that a quorum is required of nine board members for a quorate meeting of the CSC board—given that there are only 11 members in total, the refusal of all three ACTU members to attend would render any such meeting inquorate. This is simply not good enough and could lead to effective paralysis of decision making in the CSC where decisions are likely to be made where a majority supports them but not the ACTU members. Effectively, it allows the ACTU members to take their bat and ball and go home.

The coalition will be moving a number of amendments to improve these bills, but, even if passed, they will still propose changes that we do not consider to be good policy on balance. As such, these bills should not be supported.