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ComSuper Bill 2011

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2010-2011

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

 

 

 

COMSUPER BILL 2011

 

 

EXPLANATORY MEMORANDUM

 

                                 

 

 

(Circulated by authority of the Minister for Finance and Deregulation,

Senator The Honourable Penny Wong)

 

 

 



Glossary

The following abbreviations and acronyms are used in this Explanatory Memorandum.

 

Abbreviation/acronym

Definition

1922 scheme

the scheme established under the Superannuation Act 1922

Act

ComSuper Act 2011 as passed by the Parliament

Bill

ComSuper Bill 2011

CEO

Chief Executive Officer

CRF

Consolidated Revenue Fund

CSC

Commonwealth Superannuation Corporation

CSS

Commonwealth Superannuation Scheme

Defence Minister

Minister for Defence

DFRB

Defence Forces Retirement Benefits Scheme

DFRDB

Defence Force Retirement and Death Benefits Scheme

DFSPB

Defence Force (Superannuation) (Productivity Benefit) Scheme

FMA Act

 

Financial Management and Accountability Act 1997

Minister

Minister for Finance and Deregulation

MSB

Military Superannuation and Benefits Scheme

PNG

the scheme provided for by regulations made under the Papua New Guinea (Staffing Assistance) Act 1973

PSS

Public Sector Superannuation Scheme

PSSAP

Public Sector Superannuation Accumulation Plan



Outline

The ComSuper Bill 2011 (the Bill) will establish ComSuper as a statutory agency for the purposes of the Public Service Act 1999, consisting of a Chief Executive Officer (CEO) and staff.  The CEO, an independent statutory officeholder, will be the head of ComSuper.  ComSuper will also be a prescribed agency for the purposes of the Financial Management and Accountability Act 1997 (FMA Act), and that Act will apply to the operations of the agency.

The Bill is part of a package of three Bills giving effect to Government decisions in 2008 and 2009 to modernise Australian Government superannuation and establish governance arrangements for the Commonwealth superannuation schemes that are effective and consistent with the broader superannuation industry.  The other two Bills in the package are:

·            the Governance of Australian Government Superannuation Schemes Bill 2011 (the Governance Bill), which merges 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 from

1 July 2011

·            the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011, which contains the consequential and transitional provisions necessary to facilitate the merger, the changes to superannuation administration and the modernisation of specific aspects of Australian Government superannuation to align with the broader superannuation industry.

The function of the CEO is to provide administrative services to the Commonwealth Superannuation Corporation (CSC), which will be established as the trustee of the main Australian Government civilian and military superannuation schemes by the Governance of Australian Government Superannuation Schemes Bill 2011.  The CEO is not subject to ministerial direction in the performance of this statutory function. 

The CEO will be subject to any reasonable direction from CSC regarding the administrative services and will be required to comply, where possible, with any policies, guidelines and standards regarding administrative services determined by CSC.  This provides a capacity for CSC to influence the quality of administrative services and priorities underpinning those services.  This recognises that CSC is responsible for the general administration of each superannuation Act, and therefore each superannuation scheme, for which it has legislative responsibility.  Consequently, it is envisaged that the CEO will work in partnership with CSC to ensure administrative services are delivered efficiently and effectively.  

However, the CEO is a statutory officeholder and has other functions that are specified in Commonwealth laws.  This includes satisfying any requirements imposed on Agency Heads by the Public Service Act 1999 and compliance with the requirements of the FMA Act when dealing with public money and public property.  The CEO and CSC will need to take these obligations into account when establishing service standards and assessing the quality of the services that are provided.

 



 

In practice, this means that the CEO would operate on the basis that CSC is the client to which the CEO provides administrative services.  This is in the context that the Commonwealth sets the overarching policy and legislative framework for both the CEO and CSC, as well as the broader framework in which statutory bodies, such as the CEO and CSC, operate.

The CEO will provide administrative services to CSC in relation to the following superannuation schemes:

·            the scheme established under the Superannuation Act 1922 (1922 scheme)

·            the Commonwealth Superannuation Scheme (CSS)

·            the Public Sector Superannuation Scheme (PSS)

·            the Public Sector Superannuation Accumulation Plan (PSSAP)

·            the Military Superannuation and Benefits Scheme (MSB)

·            the Defence Force Retirement and Death Benefits Scheme (DFRDB)

·            the Defence Forces Retirement Benefits Scheme (DFRB)

·            the Defence Force (Superannuation) (Productivity Benefit) Scheme (DFSPB)

·            the scheme provided for under the Papua New Guinea (Staffing Assistance)

Act 1973
(PNG).

The CEO will be appointed on a full-time basis by the Minister and his or her remuneration will be determined by the Remuneration Tribunal.

The function of the staff of ComSuper will be to assist the CEO in the performance of his or her functions.  The staff are to be engaged under the Public Service Act 1999 .

The Bill commences on 1 July 2011.

Financial Impact Statement

The Bill has no financial impact.



 

COMSUPER BILL 2011

NOTES ON CLAUSES

 

PART 1—PRELIMINARY

Clause 1 - Short title

Clause 1 is a formal provision that the Bill, once enacted, may be referred to as the ComSuper Act 2011.

Note :  The clauses in the Bill will become sections of the Act on Royal Assent.

Clause 2 - Commencement

2.         Clause 2 provides that Sections 1 and 2 of the Bill will commence on Royal Assent, with the remaining clauses commencing upon commencement of the Governance Bill. It is proposed that the Governance Bill will commence on 1 July 2011.

Clause 3 - Definitions

3.         Clause 3 sets out definitions of terms that are relied on in other provisions throughout the Bill.  These definitions are the following:

·                 CEO means the Chief Executive Officer of ComSuper.  This office is established under clause 7 of the Bill and the functions and powers of the CEO are set out in clause 8

·                 CSC has the same meaning as in the Governance Bill.  It is short for the Commonwealth Superannuation Corporation, and refers to the body corporate to be continued in existence under clause 5 of that Bill

·                 ComSuper means the body established under clause 4 of the Bill

·                 Defence Minister means the Minister responsible for the Defence Act 1903

·                 governing deed has the same meaning as in the Governance Bill.  Under that Bill, governing deed refers to the Trust Deed within the meanings of the Military Superannuation and Benefits Act 1991 , the Superannuation Act 1990 and the Superannuation Act 2005 respectively

·                 modifications includes additions, omissions and substitutions.  This definition is relied on in subclause 8(6)

·                 PSSAP has the same meaning as in the Superannuation Act 2005 .  It is short for the Public Sector Superannuation Accumulation Plan.  That Act defines PSSAP as the scheme established under the Trust Deed made under that Act

·                 superannuation scheme administered by CSC has the same meaning as in the Governance Bill.  Under that Bill, this term refers to:

- the scheme established under the Superannuation Act 1922

(1922 scheme)

- CSS (short for Commonwealth Superannuation Scheme) as defined in the Superannuation Act 1976

- DFRB (short for Defence Forces Retirement Benefits Scheme), which is the scheme provided for by the Defence Forces Retirement Benefits Act 1948

- DFRDB (short for Defence Force Retirement and Death Benefits Scheme), which is the scheme provided for by the Defence Force Retirement and Death Benefits Act 1973

- DFSPB (short for Defence Force (Superannuation) (Productivity Benefit) Scheme) which is the scheme provided for under a determination made under Part IIIAA of the Defence Act 1903

- MSB (short for Military Superannuation and Benefits Scheme) as defined in the Military Superannuation and Benefits Act 1991

- PSS (short for Public Sector Superannuation Scheme) as defined in the Superannuation Act 1990

- PSSAP (short for Public Sector Superannuation Accumulation Plan ) as defined in the Superannuation Act 2005

- PNG (short for the Papua New Guinea Superannuation Scheme), which is the superannuation scheme established by regulations made under the Papua New Guinea (Staffing Assistance) Act 1973.

PART 2—COMSUPER

Clause 4 - Establishment

4.         Clause 4 establishes ComSuper.

Clause 5 - Constitution

5.         Clause 5 provides that ComSuper consists of the CEO and the staff of ComSuper.

6.         The note to this clause makes it clear that ComSuper does not have a separate legal identity to that of the Commonwealth.  However, ComSuper will be a prescribed agency for the purposes of the FMA Act.  As a prescribed agency, ComSuper will be financially autonomous from the Department of Finance and Deregulation under the FMA Act for the proper management of public money and public property within its control or custody.

7.         The office of CEO is established by clause 7 and provisions relating to the role and appointment of the CEO are provided at Divisions 1 to 3 of Part 3 of the Bill.

Clause 6 - Function

8.         Clause 6 provides that ComSuper’s function is to assist the CEO in the performance of the CEO’s function.  The CEO’s function is specified in clause 8.

PART 3—CHIEF EXECUTIVE OFFICER, STAFF AND CONSULTANTS

Division 1—Function and powers of the CEO

Clause 7 - Chief Executive Officer

9.         Subclause 7(1) provides that there is to be a CEO of ComSuper.  The CEO is a statutory officeholder.

10.       Subclause 7(2) provides that the CEO is not an officer within the meaning of the Commonwealth Authorities and Companies Act 1997 .  The purpose of this provision is to make it clear that the CEO is not a director or senior manager of any Commonwealth authority as defined in that Act, including CSC.

Clause 8 - Function and powers of the CEO

11.       Clause 8 sets out the function and powers of the CEO.

12.       Subclause 8(1) provides that the CEO’s function is to provide administrative services to CSC in the performance of its functions in relation to a superannuation scheme administered by CSC.   Administrative services would include (but would not be limited to):

·            keeping and maintaining member records

·            processing claims and paying benefits

·            providing information to members

·            collecting contributions from employers and members

·            reporting to CSC against agreed benchmarks.

13.       The note accompanying subclause 8(1) reflects that the CEO has other functions associated with being a statutory officeholder and managing the affairs of ComSuper.  This includes preparing reports to the Government on the expenditure of public money.

14.       Subclause 8(2) provides that the CEO has the power to do all things necessary or convenient to be done for, or in connection with, the performance of his or her function.  This would include, among other things, hiring staff and entering into contracts.

15.       The Government recognises that an effective partnership between the CEO and CSC is essential for the delivery of efficient and effective administrative services.  Consequently, subclause 8(2) enables the CEO to enter into a written agreement with CSC about the performance of the CEO’s powers and function.  Such an agreement could assist the CEO to clarify the expectations of CSC regarding the quality of administrative services to be provided by the CEO.  The development of an agreement would encourage discussion between the CEO and CSC on a common approach for delivering high quality administrative services.  A decision to enter into an agreement would be a matter for the CEO and CSC.

16.       Subclause 8(3) provides that when providing administrative services to CSC, the CEO is subject to any directions issued by CSC and must endeavour to act in accordance with policies, guidelines and standards determined by CSC.  This subclause is subject to subclauses 8(5) and (6).

17.       The capacity for CSC to issue directions recognises that CSC is responsible for the general administration of each relevant superannuation Act.  Where there are deficiencies in service quality, it will be open to CSC to issue a direction to the CEO to rectify the deficiency.   A direction by CSC could provide clarity where there are differences between the CEO and CSC regarding priority.

18.       The legislation also provides that, in providing administrative services to CSC, the CEO must endeavour to act in accordance with policies, guidelines and standards determined by CSC.  These policies, guidelines and standards are integral for the delivery of efficient and effective administrative services that, where possible, are in line with better practice industry standards.  It would be open for CSC to consult with the CEO during the development of its policies, guidelines and standards to ensure that they are achievable.

19.       In issuing directions or determining its policies, guidelines and standards, CSC will need to be cognisant of the CEO’s position as a statutory office holder under Commonwealth legislation.  This will include taking into account any resource implications, noting that the Commonwealth, and not members, pay for the administrative services delivered by the CEO.

20.       Subclause 8(4) clarifies that if a direction is given to the CEO by CSC, the direction is not a legislative instrument for the purposes of the Legislative Instruments Act 2003 because it is administrative in character.  It does not determine or alter the content of the law.  The provision is included to assist readers and is merely declaratory.

21.       Subclause 8(5) provides that the CEO, when providing administrative services to CSC, will not be subject to the directions of CSC under subclause 8(3), to the extent that:

·            compliance with the direction would be inconsistent with the CEO’s performance of functions or exercise of power under the FMA Act in relation to ComSuper

·            the direction relates to the CEO’s performance of functions or exercise of powers under the Public Service Act 1999 in relation to ComSuper

·            compliance with the direction would be inconsistent with another law of the Commonwealth or a Commonwealth policy related to the administration of an Australian Government superannuation scheme.

22.       This provision recognises that the CEO, as a statutory office holder, also has responsibilities under the FMA Act and the Public Service Act 1999 .  The CEO may also be subject to other Commonwealth laws and will also need to comply with relevant Commonwealth policies.  The CEO and CSC would be expected to develop appropriate strategies for addressing potential conflicts that may arise from time to time regarding these obligations and the CEO’s function to provide administrative services to CSC.

23.       Subclause 8(6) provides that, in relation to the PSSAP, subclauses 8(1) and (3) have effect subject to such modifications, if any, as are prescribed by the regulations and that the regulations may provide that subclauses 8(1) and (3) cease to have effect at a specified time.  This authority to make regulations is included to allow modifications to be made to this provision or the provision to cease to apply if necessary.

24.       In particular, it is intended that this provision has sufficient flexibility to allow the administration of the PSSAP to be outsourced to the available competitive market.   To achieve this, there needs to be adequate flexibility as outsourcing would involve engaging a commercial provider to carry out the administration function under contractual arrangements and there may be a need for arrangements to commence without being subject to the uncertainty surrounding timing of legislative passage. This would assist in a smooth transition to the outsourced arrangements.

25.       Regulations made under this subclause would be subject to disallowance.

Division 2—Appointment of the CEO

Clause 9 - Appointment

26.       Subclause 9(1) provides that the CEO is to be appointed by the Minister by written instrument, on a full-time basis.

27.       Subclause 9(2) provides for the Minister to consult with the Defence Minister in relation to the appointment of the CEO of ComSuper.  This reflects that the CEO of ComSuper is responsible for providing administrative services to CSC in relation to both the Commonwealth’s civilian superannuation schemes and military superannuation schemes.

28.       Subclause 9(3) provides that the appointment of a person as CEO is not invalid because of a defect or irregularity in connection with the person’s appointment.

Clause 10 - Term of appointment

29.       Clause 10 provides that the CEO holds office for the period which is specified in the instrument of appointment.  That specified period, however, must not exceed five years.  Under subsection 33(4A) of the Acts Interpretation Act 1901, the CEO can be reappointed. 

Clause 11 - Acting CEO

30.       Subclause 11(1) provides for the appointment by the Minister of an acting CEO in any of the following circumstances:

·            where there is a vacancy in the office of the CEO regardless of whether an appointment under clause 9 has previously been made to that office

·            where the CEO is absent from duty

·            where the CEO is absent from Australia

·            where the CEO is unable to perform the duties of the office of CEO, regardless of the reason for the inability.

31.       Subclause 11(2) provides generally that anything done by a person purporting to act under a CEO appointment is not invalid only because of the existence of any of the following circumstances:

·            the occasion for the appointment had not arisen

·            the appointment had an associated defect or irregularity

·            the appointment had ceased to have effect

·            the occasion to act had either not arisen or it had ceased.

32.       The note to this clause assists the reader by providing reference to the appointment provisions of the Acts Interpretation Act 1901.

Division 3—Terms and conditions of the CEO’s appointment

Clause 12 - Remuneration and allowances

33.       Clause 12 establishes the CEO’s remuneration and allowances.  Recreation leave and leave of absence are dealt with separately under clause 13.

34.       Subclause 12(1) , which deals with remuneration and not allowances, provides that the CEO is to be paid remuneration determined by the Remuneration Tribunal. However, where there is no operative determination by the Remuneration Tribunal, then the CEO is to be paid such remuneration as is prescribed by the regulations.

35.       Subclause 12(2) provides that the CEO is to be paid such allowances as are prescribed by the regulations.

36.       Subclause 12(3) provides that clause 12 has effect subject to the Remuneration Tribunal Act 1973.

Clause 13 - Leave of absence

37.       Subclause 13(1) provides that the CEO has recreation leave entitlements as determined by the Remuneration Tribunal.

38.       Subclause 13(2) allows the Minister to grant the CEO leave of absence, other than recreation leave, on such terms and conditions as to remuneration or otherwise that the Minister determines in writing.

Clause 14 - Outside employment

39.       Clause 14 provides that the CEO must not engage in paid employment outside the duties of his or her office without the Minister’s approval.

Clause 15 - Disclosure of interests

40.       Clause 15 requires the CEO to give the Minister notice of all pecuniary interests and non-pecuniary interests that the CEO has or acquires that could conflict with the proper performance of the CEO’s functions.

Clause 16 - Other terms and conditions

41.       Clause 16 provides for the Minister to determine terms and conditions of the CEO’s appointment in relation to matters not covered by the Act.  Under this clause the CEO holds office on those other terms and conditions.

Clause 17 - Resignation

42.       Subclause 17(1) provides that the CEO may resign his or her appointment by giving the Minister a signed notice of resignation.

43.       Subclause 17(2) provides that the resignation takes effect on the day it is received by the Minister or a later day if one is specified in the notice of resignation.

Clause 18 - Termination of appointment

44.       Subclause 18(1) provides for termination of the CEO’s appointment by the Minister in any of the following circumstances:

·            misbehaviour or physical or mental incapacity of the CEO

·            bankruptcy of the CEO

·            application by the CEO to take the benefit of any law for the relief of bankruptcy or insolvent debtors

·            the CEO compounds with his or her creditors

·            assignment by the CEO of his or her remuneration for the benefit of creditors

·            absence from duty by the CEO, except on leave of absence, for 14 consecutive days or for 28 days in any 12 months

·            failure by the CEO to comply with the requirement under clause 14 that the CEO not engage in outside employment without the Minister’s approval

·            failure by the CEO, without reasonable excuse, to comply with the requirement under clause 15 about disclosure of interests.

46.       Subclause 18(2) provides for the Minister to consult with the Defence Minister in relation to the termination of the CEO of ComSuper.

Division 4—Staff and consultants

Clause 19 - Staff

44.       Subclause 19(1) provides that the staff of ComSuper are to be persons engaged under the Public Service Act 1999 .

48.       Subclause 19(2) provides that, for the purposes of the Public Service Act 1999 , the CEO and the staff of ComSuper together constitute a Statutory Agency, and the CEO is the Head of that Statutory Agency.

Clause 20 - Consultants

49.       Clause 20 provides that the CEO may, on behalf of the Commonwealth, engage consultants to assist in the performance of the CEO’s functions.  This will enable the CEO to gain expert advice relevant to his or her functions, as required.

PART 4 - FINANCE AND REPORTING REQUIREMENTS

Division 1—ComSuper Special Account

Clause 21 - ComSuper Special Account

50.       Subclause 21(1) establishes the ComSuper Special Account. Subclause 21(2) provides that the Account is a Special Account for the purposes of the FMA Act.

Clause 22 - Credits to the Account

51.       Clause 22 requires all amounts received for the purposes of the Account to be credited to the Account.

Clause 23 - Purposes of the Account

52.       Clause 23 establishes the purposes of the Account.  These are in relation to, among other things:

·            expenses incurred by ComSuper in the performance of its function under the Act or another law of the Commonwealth

·            remuneration and allowances payable to any person under the Act

·            the payment of an agreed amount to CSC in relation to a superannuation scheme administered by CSC.  Both ComSuper and CSC incur expenses in relation to the administration of the main Commonwealth civilian and military superannuation schemes.  Expenses incurred by CSC will be paid by CSC

·            meeting expenses of administering the Account and to repay amounts required by law

·            reducing the balance of the Special Account (and, therefore, the available appropriation for the Account) without making real or notional payment.  This would, for example, facilitate the return of savings to the Budget.

Division 2—Reporting requirements

Clause 24 - Annual report

53.       Subclause 24(1) requires the CEO to prepare and give the Minister an annual report in relation to the performance of the CEO’s function during the year. It is required to be given to the Minister for presentation to the Parliament.

54.       Because the Act does not include a specified period of time for provision of the annual report, pursuant to subclause 34C(2) of the Acts Interpretation Act 1901 , it will need to be provided by 31 December each calendar year in respect of the year ended on the previously occurring 30 June.  Under subsection 34C(3) of the Acts Interpretation Act 1901 , the Minister is required to table the annual report within fifteen sitting days after the Minister receives it from the CEO.

55.       Subclause 24(2) provides that the CEO must include in the report:

·            particulars of any directions given to the CEO by CSC during the year, as contemplated by subclause 8(3), and the impact of the directions on the performance of the CEO’s function

·            financial statements required by section 49 of the FMA Act

·            an audit report on those statements under section 57 of the FMA Act.

PART 5—MISCELLANEOUS

Clause 25 - Delegation by the CEO

56.       Clause 25 provides generally for delegation by the CEO.

57.       Subclause 25(1) provides that the CEO may delegate, in writing, all or any of the CEO’s functions or powers under the Act, to an SES employee or acting SES employee in ComSuper.  Under section 53 of the FMA Act, the CEO will also be able to delegate powers or functions to employees who are not SES employees.

58.       Subclause 25(2) provides that, in exercising powers of the CEO under a delegation, the delegate must comply with any written directions given by the CEO.

Clause 26 - Indemnification

59.       Subclause 26(1) provides that anything done, or omitted to be done, in good faith by the CEO in the performance of his or her function set out in clause 8 or a member of the staff of ComSuper in the performance of that function, does not subject him or her personally to any action, liability, claim or demand.

60.       Subclause 26(2) provides that subclause 26(1) does not prevent CSC from being subject to an action, liability, claim or demand. 

61.       The purpose of these provisions is to direct any action, liability, claim or demand related to the performance of the CEO’s function to CSC rather than the CEO or a member of staff of ComSuper.  Clause 35 of the Governance Bill provides for money payable by CSC in respect of an action, liability, claim or demand that relates to an Act that it administers, regulations made under such an Act or governing deed, to be paid out of the CRF or the relevant superannuation fund, depending on the circumstances.

Clause 27 - Regulations

62.       Clause 27 empowers the Governor-General to make regulations prescribing matters required or permitted to be prescribed or which are necessary or convenient for carrying out or giving effect to the Act.