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Tuesday, 2 June 1987
Page: 3808

Mr CARLTON(6.12) —The Occupational Superannuation Standards Bill, the Insurance and Superannuation Commissioner Bill and the Insurance and Superannuation Commissioner (Consequential Provisions) Bill basically arise because of the action by the trade union movement dating back to September 1985. Later I will explain what the history of the matter is. Since then, the Government has been issuing Press releases on the standards to be applied to the conduct of superannuation funds. People have had to try to make decisions on the basis of those Press releases and without the benefit of legislation. This has been a practice of this Government. It introduced a wide range of tax measures in a mere statement in September 1985, and it took months and months for the legislation to come through. People were not able to order their affairs on the basis of any legislation. The same thing has happened with the media; statements were made about new rules of media ownership and people risked enormous sums of money without the basis of legislation and, in that case, took great risks.

In this case, all those whose job it is to carry out in an orderly fashion the conduct of superannuation funds have been relying for months and months-in fact, since the Government put out a Press release in December 1985-on a series of Press releases in order to make satisfactory judgments on people's assets for their retirements. We are now running into the last few weeks before an election. This legislation will not be dealt with by the Senate during this sitting because it was not introduced into the Senate by 1 June. The Government must be sorely embarrassed by the fact that the industry, which has been screaming for some sort of legislative base for its activities, will, once again, be disappointed by the headlong rush of this Government into a premature election. That is why the House of Representatives is now looking at this Bill. It obviously will not be passed by the Parliament before it is dissolved.

Mr Hurford —With your assistance, I think we can get it through.

Mr CARLTON —The Minister at the table says it can get through with my assistance. The problem is that the Senate is absolutely jam packed with legislation. Senators are being asked to debate quite important legislation within a matter of two or three hours at the most for each Bill. They have expressed their extreme concern about this, and it is unlikely that they will accept this legislation, however much we would like the framework to be in place. That is the problem of the Government; it is responsible for the delay in bringing this Bill before the House. It has had a long time to do so. Since its original statement in December 1985, the Government has had 18 months or more to bring down this legislation and now, at the last gasp, it is brought before the Parliament.

The first set of changes the package of Bills brings about is the appointment and setting up of an office of the Insurance and Superannuation Commissioner. This is a new body. There is an abolition of the current statutory positions of the Insurance Commissioner and the Life Insurance Commissioner. Earlier, it was foreshadowed that an Office of Occupational Superannuation Commissioner be set up separately, but that proposal has been dropped. The two insurance commissioners and the Government actuary will be included in the new office. The Opposition has no quarrel with bringing them all into the one office and the one statutory area. It seems to be a sensible rationalisation, except that I draw the attention of the Minister for Community Services and Minister Assisting the Treasurer (Mr Hurford) to the added costs that have been incurred in doing this. An interesting letter appeared in the Australian Financial Review of Monday, 1 June from Mr Ray Stevens, Director, Mercer Campbell Cook and Knight of Melbourne. I will read the letter because it makes a very important argument:

Sir, When a bill is introduced into Parliament these days, it must be accompanied by a statement on the costs involved in implementing the proposal set out in the bill.

This requirement has the commendable objective of assisting the Parliament to decide whether the costs involved in implementing and maintaining the proposals submitted are justified by the bill's objectives.

On May 14, 1987 the introduction of three bills relating to insurance and superannuation demonstrated that the Public Service treats these requirements as a joke.

Two of the bills relate to establishment of the new office of insurance and superannuation commissioner.

Under this commissioner there will be three deputy commissioners, each with his own department. Two of these departments already exist, operating as the offices of the Insurance Commissioner and the Life Insurance Commissioner (Occupational Superannuation).

An interim group established a year ago in anticipation of Parliament's approval of the Occupational Superannuation Commissioner's office has grown like wildfire. Some of its functions were intended to replace existing Tax Department activities.

Avoidance of duplication has not, however, worked in practice. For example, new trust deeds and trust deed amendments must now be sent to both the Tax Department and the Interim Group, instead of just the Tax Department, with each requiring completion of a different questionnaire.

In spite of this the bills presented to Parliament contain a financial impact statement claiming that the only additional expenditure will be the remuneration to be paid to the new commissioner.

``The integration of insurance, superannuation and actuarial functions should improve efficiency and provide savings.''

Mr Stevens was then quoting from the Minister's second reading speech. The letter continued:

With two existing departments continuing as at present, and a third new department being added, this claim shows the public servants are treating the requirements of Parliament as a joke.

However, the statement which really takes the cake appears in the Occupational Superannuation Standards Bill.

Under this bill it is proposed that a fee be paid by each superannuation fund to recover the costs of administering the supervisory requirements. ``it is therefore anticipated that generally there will be no net cost to the Commonwealth,'' says the financial impact statement.

In other words, if the cost of a new government department can be directly passed on to the community, the Parliament can ignore the cost when deciding whether the expanded public service is justified!

An initial levy of $30 a fund, estimated to raise $6 million a year, is proposed under this third bill-to cover costs which the statements presented with two of the three bills suggest will be covered by improved efficiency.

It seems unlikely that any of the variety of Opposition groups will question the need for this legislation. It just goes to show you can fool some of the people some of the time, but the only people you can fool all of the time are Federal members of Parliament.

I inform Mr Ray Stevens that the Opposition is taking up this matter and it considers his arguments to be of some force, perhaps greater than he might think. In January, the Minister for Community Services and Minister assisting the Treasurer wrote to the life insurance industry suggesting that not only should there be an initial $30 a fund levy but also another levy on the industry to cover the cost of regulation. The Minister suggested that this would happen and he sought the views of the industry. The industry objected very strongly to that, calling a supervisory levy an unprecedented, selective and discriminatory tax. It was envisaged that the cost of a levy might be a couple of million dollars. Does this mean that every time some regulatory requirement on an industry is set up, a tax or charge on that industry is made to cover the cost of the regulatory body so that we can say to the Parliament, as pointed out by Mr Stevens, that it is not really costing anything or the financial impact of this is nil, because an additional cost is actually being imposed on an industry. The additional cost might not be borne directly by the taxpayer, but that is not very useful. The cost is obviously passed to the consumers through the higher charges that must be paid for the administration and so on of these funds. My colleague the honourable member for Richmond (Mr Blunt) will be moving a couple of amendments relating to the office of the Insurance and Superannuation Commissioner. The Liberal Party will be supporting those amendments. I will leave it to the honourable member for Richmond to describe his amendments.

In the relatively limited time I have available let me go to the substance of the Occupational Superannuation Standards Bill. This is an important issue. The background of this is that on 4 September 1985 the Government came to an agreement with the Australian Council of Trade Unions under the accord mark 2 whereby the unions were to obtain for their members through the conciliation and arbitration system a 3 per cent disguised wage increase, called a productivity increase, which would be in the form of superannuation contributions by employers on behalf of employees. This was a deal stitched up between the Treasurer (Mr Keating) and the ACTU to disguise a wage increase which was over and above what was economically justified. It was necessary for the Treasurer to present a front to the financial community to try to say that the wage increase that was being granted, which was clearly in advance of wage increases being granted by our competitors overseas, was somehow not a wage increase. So it was called a productivity increase and it was to be paid in the form of superannuation. The ACTU pulled an old policy objective out of the drawer in order to accommodate the Treasurer on that point. On 16 December 1985, before the Conciliation and Arbitration Commission had made any decision, the Government published guidelines and draft operating standards for occupational superannuation funds.

On 11 June 1986, some six months later, the Government published comprehensive standards for these funds to meet the requirements of the Australian Taxation Office so that the funds would enjoy the tax concessions that are available to superannuation funds. Unfortunately for the Government, on 26 June 1986, shortly after these comprehensive standards had been issued, the Conciliation and Arbitration Commission came out with a rather confused decision, a typical political fudge of that body, in which it said that it was not prepared to agree that everybody would get this 3 per cent so-called productivity increase but that it would only confirm consent arrangements between employers and unions. That meant, of course, that the more powerful unions would be able to force employers into putting money into union- controlled superannuation funds. On 30 July 1986 the Government, obviously a little concerned by this CAC refusal absolutely to toe the line, issued a further statement promising consultation with the industry.

On 10 March 1987 the Conciliation and Arbitration Commission, seeing the chaos that was reigning in this area because unions were bullying employers into various schemes, modified its decision and said that rather than rely on consent arrangements it would arbitrate in any particular dispute, thereby putting itself in the position to force this so-called productivity increase on the whole of the employed work force. That is the history of it. It started with a fraudulent deal between the Treasurer and the ACTU in order to disguise a wage increase. It has led to the Government scrambling along the way to try to catch up with what the Conciliation and Arbitration Commission was deciding and what the unions were pushing for in the field. The standards, in effect, have been operative from 1 July 1986 and here at last, in the dying days of the Parliament, we have some legislation which cannot get through the Senate, but we still do not have the regulations which are the real operating standards. So this Bill, on operating standards, merely sets up a framework for regulations which, of course, are subject to disallowance under the Acts Interpretation Act. We will certainly be looking very closely at those regulations when they come in to see whether we like them.

We have expressed in the past our reservations about certain aspects of the standards, particularly about the preservation of benefits to age 55 and not to age 65. We will not oppose this main aspect of the Bill, but we certainly would like to have a look at the precise standards when we see the regulations. Now that they will not go through the Parliament we expect to be setting up the new regulations in government. For the record, it seems a little futile to go ahead now, given that the whole legislation will be under our control in a very short time. Nonetheless, I will proceed at the Committee stage to move two amendments. The first amendment is to clause 3, page 3. At the end of the definition of `superannuation fund', we want to add:

but does not include:

(c) a fund established as a result of an employer or employers being threatened, intimidated or coerced by a trade union or trade unions.

In other words, for the superannuation funds to enjoy the taxation concessions that are available we would want to be certain that funds were not set up as a result of coercion. That taxation concessions would not be available to a fund if an employer who has to pay money on behalf of the employee into a fund does not agree to put the money into that fund, or if the money is put into a fund because of pressure and without the agreement of the employer, of if employees did not agree that their long term retirement money was to go into a particular fund. As far as we are concerned, that is an elementary matter of civil liberties and rights, and it is linked with our approach to industrial relations, to non-compulsory unionism. Funds such as the building unions superannuation scheme fund which have been set up as a result of coercion of employers by unions would have to be examined very closely and would be excluded from the taxation concessions if it were found that they were set up as a result of coercion.

The second amendment will be to clause 7, page 6, sub-clause (2), after paragraph (j). We propose that the following paragraph be inserted:

(ja) the levels of administrative fees, commissions or other deductions which may be payable from amounts contributed to superannuation funds;

Here we would want to regulate these fees to ensure that money was not siphoned off by unions and used for their own purposes instead of for the genuine administration of funds by the fund managers. We believe that a very close look has to be taken at where this money is going and how it is being used-money that employees, as a matter of free choice, would rather go into a fund organised by some body other than a union, or money that employers, as a matter of free choice, would rather went into a fund other than one governed by a union. It is not a very happy thought for somebody who is looking at his or her retirement nest egg to be under the control of unions such as those in the building industry that are responsible for the BUS scheme. One does not get much of a squeal from the industry on these things because the industry likes to manage these funds. As these funds build up, the most reputable of companies become involved in the management of the funds. But the source of the funds is tainted in many cases, because they are there as a result of intimidation and, in the case of the building unions, very much by intimidation.

If I had more time I would give the House a number of examples of where people have been bludgeoned on building sites and elsewhere into becoming members of these funds, of where subcontractors have been forced into these funds with employees, and where they have no choice if they are to continue to work on building sites. There are other industries where this is happening. It simply cannot be allowed to continue. Under a Liberal government it certainly will not be allowed to continue. Therefore, within the very near future we will take steps in office to prevent this kind of coercion occurring.

Sitting suspended from 6.30 to 8 p.m.