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Wednesday, 18 September 1985
Page: 671

Senator SIDDONS(12.05) —Before reading through the Superannuation Legislation Amendment Bill, I was told that it was purely routine and that it was a Bill to bring into effect reports of the Senate Standing Committee on Finance and Government Operations on the management of the superannuation funds of government employees. When I reached the way in which trust members were to be appointed, I was horrified to see that the majority of them were to be appointed on a recommendation from the Australian Council of Trade Unions. In other words, quite clearly the funds were to come under the direct control of the ACTU, and they will do so if this Bill is passed. The funds involved are up to $7m per week-enormous amounts of money. The Australian Democrats make their position abundantly clear: There is no way we can support this legislation, in spite of its urgency and in spite of the reforms that it brings into being, unless the method of selecting the five-member trust to control these enormous flows of money is reformed.

I will outline how the membership of the trust is to be made up. There is to be one permanent member appointed by the Minister. We agree about that. There is to be one permanent member appointed on the recommendation of the ACTU. We could accept that. But then there are to be three part time members, and two of those part time members are to be appointed, again, on the recommendation of the ACTU. So that clearly puts the ACTU in the position of having direct control over the affairs of these enormous superannuation moneys, $7m per year. The Opposition has already pointed out that the ACTU's record in business management is very poor indeed; in fact, it is abysmal. The Opposition drew attention to the problems with ACTU-Solo Enterprises Pty Ltd and the retailing enterprise of Bourke's store. Quite clearly, the ACTU is not set up, nor does it have the necessary expertise and experience, to get involved in the highly specialised area of investing funds.

The Democrats have given a lot of thought as to how the trustees should be appointed. We are very happy with the legislation apart from this one critical area. In fact, in looking at the problems that occurred previously, we consider this to be a very urgent piece of legislation. When the Senate Committee on Finance and Government Operations looked into the Superannuation Fund Investment Trust, it took note of previous reports of problems in this area by the Attorney-General, by the Monaghan inquiry into the Superannuation Fund Investment Trust and other inquiries. The Senate Committee listed no fewer than five very serious weaknesses. The Committee said, firstly, that there had been a failure clearly to formulate the objectives and duties of the Superannuation Fund Investment Trust. Secondly, it said that there had been a failure by the trust to adopt sound accounting and taxation practices. Thirdly, it said that investment policies had been adopted that were imprudent and not in keeping with the obligations, responsibilities and high commercial standards expected of a Commonwealth statutory authority. Indeed, the Superannuation Fund Investment Trust had become too closely involved with some enterprises and was not maintaining a clear arm's length relationship. Fourthly, the Committee found that there had been a failure to adopt suitable selection procedures for the appointment of a Chairman. Fifthly, it found that there was gross understaffing in the Trust's administrative offices, which was caused by a slavish adherence to Public Service staff ceilings and a total disregard for its ability to function effectively. There was a major morale problem and a feeling of isolation and abandonment among both staff and management. Yet such a body was controlling funds of $7m a week. So the Senate Committee's inquiry was very important. It is urgent that something be done to reform the Superannuation Fund Investment Trust.

As I have said, our criticism rests with the proposed method of appointing the five-member Board. How should the members be appointed? We have considered various options. One suggestion was that a joint parliamentary committee be set up to advise the Minister on the selection of trustees. We discounted that suggestion. Are parliamentarians the repositories of wisdom? Have we any guarantee that if a joint parliamentary committee selected the trustees the members of that committee should be more experienced or any better than anybody else would be in making wise appointments?

We have considered the Opposition's suggestion that various specialised bodies be contacted to consider the appointment of the trustees. The Opposition has made the suggestion that there be a full time principal member appointed by the Minister having regard to his or her expertise in finance, industrial relations, superannuation and investment. It has suggested that one part time member be nominated by the unions representing contributors having regard to the same criteria and that three part time members be appointed by the Minister after consultation with the Securities Institute of Australia, the Life Insurance Federation of Australia, the Australian Bankers Association, the Australian Merchant Bankers Association and the Actuaries Institute of Australia, again having regard to the same criteria.

The Democrats consider that the Liberal Party's proposal is outrageous. It wants to give to organisations which are directly in competition with the Commonwealth Superannuation Fund direct influence over the activities of that Fund. Its proposal would ensure that the majority of the Board members would be selected by the enemies of the Fund. The groups to which the Liberals wish to give de facto control of the Superannuation Fund Trust have long been critics of its existence and wish to put their hands on the investment potential of that Fund. They wish to put the superannuation moneys of public servants into the hands of private banks and private investment institutions.

We believe that both the Liberals and the Government have a monumental disregard for the rights of the contributors to the Trust. They are the people who are concerned; it is their money that is in the Trust. Surely, in the final analysis, they are the people who should have authority to decide who should be selected to control their funds. We believe that the rights of contributors must be paramount in the running of their own funds. There can be no other authority and no other way that justice can be done.

Our proposal is very simple. Amendments have been circulated, which we will move in the Committee stage, to put our proposal into effect. For the reasons I have outlined, we will oppose the Liberals' proposal. We hope that the Government will give earnest consideration to the following proposal: That one permanent member be appointed by the Minister; that the second permanent member be appointed, having due regard to the recommendation of the Australian Council of Trade Unions; and that three part time members be appointed as a result of an election at large among contributors of the Trust. We have further specified that that election at large be under the supervision of the Australian Electoral Commission and that there should be certain stipulations regarding those who would be eligible to stand for election.

Prior to 1974, elections were held for trustees. A problem arose in that too many people were standing. In on case, as many as 30 people stood. We believe that this problem can be overcome very simply by insisting on two things: Firstly, that there be at least 30 employee nominees for every candidate and, secondly, that a written statement be set out on every candidate, showing each candidate's knowledge and expertise in finance, industrial relations, superannuation and investment. That would then give the contributors the opportunity and place on them the responsibility to appoint the persons who, in their opinion, have the best expertise available.

Senator Coates —What method of election are you proposing?

Senator SIDDONS —It would be a secret postal ballot under the control of the Australian Electoral Commission.

Senator Coates —But would it be first past the post, proportional representation, or what?

Senator SIDDONS —We would suggest that it be on the basis of proportional representation. I turn to another problem in the legislation and that is the length of time for which trustees will be appointed. Their appointment will be for seven years. That is a very long time if, for whatever reason, a trustee proves to be incompetent or unsatisfactory. It is very difficult to get rid of an unsatisfactory trustee once that person has been appointed for a term of seven years. We suggest that the Bill be amended to call for the election of trustees every two years once the present term of the existing trustees expires.

I understand that many honourable senators wish to speak to this Bill. It is a very important piece of legislation. I will elaborate further on our proposals at the Committee stage when our amendments will be moved. I finish my remarks by reiterating what I have said all along. We will not stand by and see the Trust handed over to the ACTU. We will not stand by and see it delivered to its enemies in the private sector who covet its wealth. We want the contributors to have control over and responsibility for their funds. In our opinion, that is the only course that can reasonably be adopted.