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Tuesday, 8 October 1985
Page: 821

Senator WALSH (Minister for Finance)(6.04) —by leave-I move:

(1) Page 1, clause 2, lines 8 to 12, leave out the clause, insert the following clause:

`2. This Act shall come into operation on the day on which it receives the Royal Assent.'.

(2) Page 5, clause 7, lines 9 to 12, leave out proposed sub-section (4), insert the following sub-section:

` ``(4) The Australian Council of Trade Unions shall not nominate a person for appointment under sub-section (1) unless-

(a) the person is a person whose name is among the names of persons submitted to the Australian Council of Trade Unions by relevant industrial organizations as persons for the nomination; and

(b) the Australian Council of Trade Unions has consulted the relevant industrial organizations in relation to the nomination.'';'.

(3) Page 14, clause 22, line 25, insert `and of the Merit Protection (Australian Government Employees) Act 1984' after `(other than sections 50E, 50EA and 52)'.

(4) Page 16, clause 23, lines 1 to 5, leave out the clause.

(5) Page 18, clause 25, lines 16 to 20, leave out proposed sub-section (6), insert the following sub-sections:

` ``(6) Where the Trust furnishes a report and financial statements to the Minister under sub-section (4), the Minister shall-

(a) cause a copy of the report and a copy of the financial statements to be laid before each House of the Parliament within 15 sitting days of that House after their receipt by the Minister; and

(b) furnish a copy of the report and a copy of the financial statements to the Australian Council of Trade Unions and, upon request made by a relevant industrial organization, to the relevant industrial organization.

` ``(7) A report furnished by the Trust under this section in relation to a year shall include particulars of any statement of policy furnished to the principal member of the Trust by the Minister during that year under sub-section 29A (6), the consideration given by the Trust to that policy and the action (if any) taken by the Trust as a result of that consideration.''.'.

I seek leave to incorporate the explanation in Hansard.

Leave granted.

The document read as follows-

Speech notes on amendments to the Superannuation Legislation Amendment Bill 1985.

I intend to move, on behalf of the Government, amendments that have been circulated to honourable senators. I do so in order to accommodate most of the concerns expressed by the Senate Standing Committee on Finance and Government Operations in its report on the Superannuation Legislation Amendment Bill 1985, and also to effect a number of amendments of a minor technical nature.

As honourable senators will know, on 8 May 1985, the Senate agreed to the motion of Senator Coates, the Chairman of the Standing Committee on Finance and Government Operations, that this Bill be referred to that committee for inquiry and report. The Committee had been conducting an inquiry into the operations of the Superannuation Fund Investment Trust.

Senator Coates tabled the Standing Committee's report on the Bill on 15 May 1985. The Government was pleased to note that the Committee approved generally of the provisions of the Bill which are aimed primarily at both giving the trust the freedom and flexibiliy to operate in the best interests of contributors to the Commonwealth Superannuation Scheme and enhancing the accountability of the Trust.

The Committee made five recommendations in its report. Four of these propose the insertion of additional provisions in the Bill. The fifth recommends that the Government obtain the advice of the Attorney-General on the matter of the legal liability of members of the trust and trust staff. I will return to this recommendation shortly.

As Senator Coates remarked when tabling the Standing Committee's report, the matters recommended for inclusion in the Bill would undoubtedly happen in practice anyway. Nevertheless, the Government has agreed to accept the thrust of recommendations 1, 2 and 4, which in major part go to further enhancing the accountability of the trust to the Parliament and to contributors.

The Government does not, however, accept the Committee's recommendation 3.

Recommendation 3 of the Standing Committee seeks to provide that one or the other of the principal member of the trust or the part-time Government nominee member 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 the trust 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 liaision 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.

I have already drawn the attention of honourable senators to Senator Coates's remark 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 in concert with the ACTU, will 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 amendments accepted by the Government are intended to:

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:

Require a copy of any interim report made by the Trust, together with interim financial statements, to be tabled in the Parliament; and

Ensure that the Trusts's Annual Report and any interim report will include particulars of any statement of Government policy provided by the Minister to the Trust (by way of the principal member) during the year, the consideration given by the trust to the policy and the action, if any, taken.

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

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.

Contrary to the impression that might have been gained by the Standing Committee, 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 the Parliament.

Liability, however raises a number of issues of considerable legal complexity. Resolution of these issues is being pursued 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

The opportunity is now being taken to also move amendments that are consequential on the proclamation on 21 July 1985 of the date of the commencment of certain sections of the Merit Protection (Australian Government Employees) Act 1984.

Before moving the proposed amendments, however, I wish to refer briefly to the June 1985 report from the Standing Committee on Finance and Government Operations on the Superannuation Fund Investment Trust which was tabled by Senator Coates on 21 August 1985. This report is the culmination of the Standing Committee's exhaustive and thorough examination of the affairs, practices and administration of the Trust.

The report deals with, among other things, various reports of the Auditor-General on the Trust's annual reports and financial statements, including the more recent annual report for 1983/84. While the Standing Committee is concerned with progress made in implementing remedial measures in respect of the Trust's accounting and financial management systems, it acknowledges that the new provisions proposed in the Bill should enable the Trust to employ adequate staff with the required skills to oversee properly the accounting and management systems.

On 31 July 1985, before the Standing Committee's report became available, I wrote to the Trust asking that it provide to me, and to the Auditor-General, comprehensive details, including the proposed timetable, of plans for the rehabilitation of the systems and procedures. I asked also that quarterly progress reports be provided by the Trust until such time as the Auditor-General is satisfied that the procedures are adequate.

The Standing Committee's report draws to attention a total of 28 findings and recommendations that either relate specifically to the Trust or have general application to statutory authorities. I propose, at a later date, to make a further response to the Senate on this report.

For the present, I would draw honourable senators' attention to Senator Coates's statement when tabling the report, that the Standing Committee believes the Bill satisfactorily provides for much needed changes to the administration of the Trust. The Standing Committee has not recommended any further changes to the Bill.

I therefore now ask that the amendments proposed by the Government be accepted by the committee.