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Wednesday, 23 May 2012
Page: 5234

Mr SHORTEN (MaribyrnongMinister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (10:54): I thank the member for Dunkley for his contribution, but I want to reassure him that, by having a test about scale, we do not assume that big is automatically best. I also want to assure him that small, well-performing funds will be able to demonstrate that size is not impeding their performance. So I hope that puts some of his concerns to rest.

I also heard him say that he felt that the government was not listening to the contribution of those opposite. When we talk about scale and the problems that they say there are with scale, I might go to what the member for Bradfield specifically said:

Secondly, the scale test, which is one of the centrepieces of this reform, does not make good sense in economic logic or day-to-day practice.

He said it was a bad idea. He has also unfairly accused me of being slow to act on the Cooper review, when in fact that is not the case. We responded to the Cooper review in December 2010, within a few—

Mr Billson interjecting

Mr SHORTEN: No, the member for Bradfield mentioned that. Thank you, Member for Dunkley. He said that we had failed to respond comprehensively to the Cooper review. Let me say that the scale test is a classic example of detail contradicting the rhetoric of those opposite. In the Cooper review it was recommendation 1.6(b). So the Cooper review, which the government has been accused of not following, explicitly called for the scale test. In fact, I wonder if some of those opposite have even read the full Cooper review.

They also showed this lack of attention to detail when they argued that the opt-in arrangement in our financial reforms was an industry fund plot. I think it is fair to say of the contemporary opposition that, whereas they can no longer find any reds under the beds and are still looking for the Greens under the beds, they are certainly convinced that industry funds are under the beds engaging in some sort of takeover of Australia, which is unfair. I think the attack on industry funds is also terribly unfair to many of the trustee directors who serve on industry funds. I would point out that Peter Collins, former Liberal leader in New South Wales, is a director of an industry. fund. I think that when those opposite attack industry funds—be it in the bilious attack by the member for Mackellar or the comments of the member for Dunkley, or indeed others—they are attacking a lot of hardworking employer reps, union reps and, indeed, former leaders of the Liberal Party. I for one do not believe that the people who serve on industry funds with the equal representation model are cat's paws for one point of view or another. I believe that they are motivated to serve in the best interests of their members.

There have also been concerns in terms of this scale proposition that somehow, by requiring trustees to consider scale, this will cause unforeseen and inappropriate outcomes. We believe that talking about scale does not mean that it will be necessary for funds to make detailed comparisons of performance against every other fund. Certainly many funds will be able to determine very quickly that scale is not an issue for them. Also, we have said in this bill that we will send a signal to smaller, poorly performing funds that they need to actively and regularly consider whether scale is an issue. APRA will consult with industry on processes that trustees could adopt to form a determination about scale and relative considerations for trustees in rectifying insufficient scale.

I think it is about time that this parliament tried to be constructive and work on the issues we agree on. If the opposition, but for this issue of scale, would support the rest of the matters and is willing to put itself into that difficult ground, I am interested to see whether, if it cannot win its amendment on scale, it will oppose improvements to the governance of superannuation funds and trustees.