Senator KERNOT (Leader of the Australian Democrats) (3.25 p.m.) —Senator Watson will not be surprised to know, considering the remarks I have made in the Select Committee on Superannuation over several years, that I look with great interest at this policy U-turn by the government. He will recall from the Senate committee recommendations that I was hoping that we would be more specific about the direction of investment, but I agreed to the recommendation which said, `Give us time, we'll change the culture, and we'll have a three-year review of how the industry is changing its own culture'. I am not convinced that that is happening as swiftly as ASFA is claiming in today's press.

  We should not lose sight of the facts that the superannuation funds have already received an absolutely massive fillip from this government from the compulsory collection of superannuation and that the scheme is underpinned by a massive $5 billion in tax concessions. That is why I think it is a legitimate question to ask: should not a very small fixed proportion of this $5 billion be invested in Australian small and medium business enterprises in this wonderfully nebulous national interest?

  In my view, it is wrong to say that we cannot pick winners. We can have set criteria. Other countries do it and they do it well. It is also erroneous to assume that all of us would not benefit from the productive investment of some small fixed amount of this money. If we look at the investment patterns of the super funds, we see that many of them have overinvested in property, equities, cash and overseas investments. In fact, $26 billion of the $169 billion in super fund assets is held overseas.

  Despite the answer of the Minister for Science and Small Business (Senator Schacht) today, I think there is clear evidence that banks are not lending the necessary capital to small and medium businesses and that the interest rate spread on fully secured small business loans is currently between eight and 10 per cent—and is rising. That is not conducive to the success of small and medium sized businesses.

  As to the mandating of this small amount, we have not even seen some sort of requirement from the government which says, `Okay, let fund members nominate if they are prepared to take a small risk in the longer term national interest'. As I have said before, if someone had put that to me when I was just starting in the work force, I am the sort of person who would have said, `Yes, I am'. I think there are a lot of other Australians out there who would be willing to do it.

  Overall, this situation points to the failure of voluntarism. Voluntarism underpinned the government's entire superannuation policy. It failed. Here are two more areas of failure: the failure of the pooled development funds—they have not worked and the government now has to restructure them—and the failure of voluntarism to persuade banks to look at sufficient lending rates for small businesses.

  I welcome the minister's statements. I do not want him to lose sight of where the ideas came from, though. That is becoming very common. The jobs levy is a recent example that comes to mind. Guess what? Now it is having another look at the direction of superannuation investment funds. I will just send it another invoice for policy development.