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Wednesday, 11 September 1985
Page: 484

Senator COATES(6.05) —When this report of the Standing Committee on Finance and Government Operations was tabled I made some remarks about it and sought leave to continue my remarks at a later stage. Since that time the Minister for Finance (Senator Walsh) has written to me in my capacity as Chairman of the Finance and Government Operations Committee, advising me of the Government's response to that report. As the Bill concerned-the Superannuation Legislation Amendment Bill 1985-is listed for debate in the very near future, I thought it would be appropriate if I reported to the Senate the results of the Minister's letter to the Committee. Senator Walsh's letter reads:

I wish to advise you that the Government had decided to accept the substance of three of the four amendments to the Superannuation Legislation Amendment Bill 1985 that were recommended in the report of the Senate Standing Committee on Finance and Government Operations tabled on 15 May 1985. I intend to move amendments to that effect.

The amendments accepted by the Government further enhance the accountability of the Trust to the Parliament and to the contributors to the Commonwealth Superannuation Scheme. The amendments I will be moving are intended to:

ensure that the Trust's annual report and any interim report will include particulars of any statements of Government policy provided by the Minister to the Trust during the year, the consideration given by the Trust to the policy and the action, if any, taken (Recommendation 1 of the Standing Committee);

require the ACTU to nominate persons for appointment to the Trust only from those persons whose names have been submitted to the ACTU by relevant industrial organisations (Recommendation 2 of the Standing Committee); and

require a copy of any interim report made by the Trust, together with interim financial statements, to be tabled in the Parliament (Recommendation 4 of the Standing Committee).

For drafting reasons, the precise wording and positioning in the Bill of the additional provisions differ somewhat from the recommendations of the Standing Committee but their substance is retained.

The Government has not, however, accepted the Committee's Recommendation 3 which seeks to provide that one or the other of the principal members of the Trust or the part-time government nominee is to have special qualifications in investment matters.

The proposed structure of the enlarged Trust, and the duties and responsibilities imposed upon it under the legislation, indicate the need for it to have members with broad qualifications, not necessarily related solely to investment. These duties and responsibilities involve not only the investment of the Superannuation Fund, but also the exercise of prudential controls, determination of policy and liaison with relevant industrial organisations as well as the staffing, control and oversight of the office of the Trust. In short, management of the Superannuation Fund goes well beyond investment of the Fund.

You remarked when tabling the Standing Committee's report on the Bill that the matters recommended for inclusion in the Bill by the Standing Committee would undoubtedly happen in practice anyway. The process of selection of Trust members, whether conducted to meet the requirements of the Minister or relevant industrial organisations as co-ordinated by the ACTU, would certainly have due regard to financial and investment expertise among the many qualities required of members of the Trust. The legislative specification of a requirement for such expertise would not only be redundant but would focus concern on only one aspect of the necessary qualifications, whether required of the principal member or the part-time government nominee, perhaps to the detriment of other, equally important concerns.

The fifth recommendation of the Standing Committee is to the effect that the Government immediately seek the current opinion of the Attorney-General on the matter of the legal liability of Trust members and Trust staff and introduce an appropriate amendment to the Act defining that liability. The Government has not put aside the matter of legal liability which was first raised in the Monaghan Report and later canvassed in the Joint Working Party Report, both of which have been tabled in Parliament.

Liability, however, raises a number of issues of considerable legal complexity. Resolution of these issues is being pursued with the Attorney-General's Department as expeditiously as possible so that consideration can be given to the matter and, if necessary, appropriate provisions included in the Superannuation Act 1976 when next it is amended.

I also understand that there is some concern as to the impact of the changes to sub-section 159 (2) of the Act on the Northern Territory. The amendments proposed are not specifically directed at, or occasioned by, the Government's negotiations with the Northern Territory on its employer superannuation liability.

The new sub-section 159 (2) of the Act proposed in paragraph 24 (1) (g) of the Bill was included so that the authorities, such as the ABC, CSIRO, etc, that prior to 1 July 1981, were treated as if exempt from making employer superannuation payments, could be relieved of the pre-1981 liability.

As the Superannuation Act 1976 now stands the Northern Territory of Australia, which became an approved authority for the purposes of that Act on 1 July 1978, has a legal obligation to pay to the Commonwealth that part of the benefits paid under the Act that has accrued in respect of service by its staff since 1 July 1978.

The Government is prepared to waive the liability of the Northern Territory that accrued in respect of service between 1 July 1978 and 30 June 1984. This liability could not legally be waived under the current legislation. it would, however, be possible to waive it under the new sub-section 159 (2).

The intention of the Government is that the Northern Territory and its authorities reimburse the Commonwealth for their share of the pensions and other benefits paid under the Commonwealth Scheme on the ``emerging cost'' basis, ie the Territory would reimburse the Commonwealth only as benefits were actually paid to the Territory's former employees from the Consolidated Revenue Fund. Under this basis, payments to the Commonwealth will commence at a very low level and increase over time, giving the Northern Territory ample time to be able to finance the cost of its share of the benefits.

The current legislation enables an authority to enter into an arrangement with the Minister for Finance to make an alternative series of payments to the Commonwealth to discharge its superannuation liabilities. The alternative adopted is known as the ``pay-as-you-go'' basis and the payments made assume funding of benefits as they accrue. Most authorities voluntarily adopt the ``pay-as-you-go'' basis of reimbursing the Commonwealth.

Paragraph 24(1) (g) of the Bill also proposes a new sub-section of the Act, 159(2D), that retains this provision but also provides that the Minister for Finance may direct that an authority shall make payments on the ``pay-as-you-go'' basis.

This new provision is a reserve power that would be used only where an authority had adopted the ``emerging cost'' basis for payment and was not, in the opinion of the Minister, making adequate provision to meet the future costs under that basis. Where ``emerging cost'' authorities are making adequate provision, or their ability to pay is not in doubt, as is the case with the Northern Territory, there would be no reason to invoke the reserve power.

As indicated above, the proposed amendments to sub-section 159(2) are not directed specifically at the Northern Territory. Therefore, whilst the proposed amendments could have application to the Northern Territory, I do not consider that the Bill could be seen as anticipating the Senate Committee's report.

I have read that letter from the Minister for Finance, Senator Walsh, into the record because of the importance of the issue and also because of the fact that this morning the Finance and Government Operations Committee held a further hearing on the Northern Territory superannuation matter. Thus it is particularly relevant for the Senate to be aware of the Minister's response to the Bill. I urge those who are concerned about some provisions of the Bill to accept the fact that the Minister has adopted the main aspects of concern that the Committee raised and, therefore, there should be no further problem about the Bill.

Question resolved in the affirmative.