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Tuesday, 17 August 1993
Page: 155

(Question No. 336)

Senator Kernot asked the Minister representing the Minister for Finance, upon notice, on 28 May 1993:

  (1) What are the details of the investments that the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme and Defence Force Superannuation Scheme have in Jupiter's Casino in Queensland.

  (2) What are the dates for purchase of shares in the casino.

  (3) How are members made aware of the interests that these three superannuation schemes have in the casino, for example are members regularly informed of any purchases or sales of securities relating to the casino, and are members informed of the investment returns on this investment.

  (4) Is this an appropriate investment in the light of the adverse publicity which the casino has received regarding irregularities in the tendering process for the Brisbane Casino licence.

  (5) (a) What considerations were taken into account in making the investment; (b) what advice did Commonwealth Funds Management (CFM) seek before investing; and (c) were the trustees of each of the funds investing in the casino aware of adverse, or potentially adverse publicity surrounding the project.

  (6) Did the department, CFM or the trustees inform the Minister of its/their intention to invest in the project.

Senator McMullan —The Minister for Finance has provided the following answer to the honourable senator's question:

  (1) On behalf of the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme, the Commonwealth Funds Management Limited Australian Equities Unit Trust owns 31,226,176 shares in Jupiters Limited at 28 June 1993 which represents approximately 17% of the share capital of this company. Jupiters Limited is the owner and operator of the Conrad Hotel and Jupiters Casino at the Gold Coast, Queensland, and licensee of the proposed new Brisbane Casino. Commonwealth Funds Management Limited (CFM) does not own any Jupiters Limited shares on behalf of the Military Superannuation and Benefits Scheme.

  (2) CFM's predecessor, the Superannuation Fund Investment Trust (SFIT), subscribed for an initial investment in the Jupiters Trust of $5 million on 3 August 1983 represented by 20 million partly paid units. These units were converted to fully paid units on 29 October 1984.

  Subsequent transactions, including bonus issues and capital reconstructions, have resulted in the present investment in Jupiters Limited.

  (3) Members are informed of the Funds' investment policies and of the investment returns on each asset class, eg. Australian shares, international shares, fixed interest, but reporting does not extend as far as investment returns, purchases or sales of securities at individual investment level. This would be an extremely difficult exercise given the many transactions undertaken by the Funds manager. Nevertheless, reference to the Jupiters Casino investment was regularly included in SFIT's annual reports since 1983.

  (4) The investment in Jupiters Limited has outperformed, in share price terms, the Australian Stock Exchange All Ordinaries Accumulation Index by a significant margin since 1983. This has been beneficial in financial terms to the interests of members of the respective superannuation schemes. CFM is not aware of any irregularities on the part of Jupiters Limited in the Brisbane Casino licence process which would cause it to dispose of the investment.

  (5) The investment by SFIT was undertaken only after exhaustive examination of the proposal over a two year period prior to the investment being made.

  (a) The decision was based solely on investment criteria and portfolio diversification undertaken in accordance with the responsibility to enhance investment returns in the best interests of members of the scheme.

  (b) SFIT sought extensive advice from external independent consultants including a detailed report from Pannell Kerr Forster, Chartered Accountants, a recognised expert in the hospitality and casino industry.

  (c) At the time the original investment was made, i.e. 3 August 1983, SFIT was responsible for the management and investment of the Commonwealth Superannuation Fund. The Boards of Trustees of the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme were not formed until 1 July 1990. The Trustees are not aware of any adverse, or potentially adverse publicity surrounding the project which would cause them to direct the Funds manager to dispose of the investment.

  (6) No. The legislation governing the activities of SFIT at the time the original acquisition was made did not require individual investment proposals to be referred to the Department of Finance or the Minister. Since the creation of the CSS and PSS Boards the responsibility for investment policy has rested with the Trustees.