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Monday, 4 December 2017
Page: 9456

Senator McKENZIE (Victoria) (12:24): It gives me great pleasure today to rise to talk about the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017. As a government, we are interested in ensuring the economic security of all Australians. If you look at our work over the previous years, it's been about delivering on a strong plan for our economy to grow jobs and ensure that all Australians, whether they are from regional Australia or capital cities, have access to well-paid employment. Similarly, though, as a government we want to ensure that as Australians near retirement they will receive their superannuation in a way that benefits their retirement. At the end of the day, it is Australians' money. Their employer puts it into their superannuation accounts every single week and it is there to accrue and provide for their retirement.

I want to thank my colleague Senator Williams for his earlier contribution on this bill around how sometimes industry super funds are used, or should I say misused, to fund election campaigns—the Leader of the Opposition's election campaign and so on. That is not the way that we want the retirement savings of hardworking Australians to be used. Through the passage of this bill, we are seeking to ensure that the governance of those industry super funds is appropriate, that it meets with community expectations. Currently, as we know, the governance model sees half of an industry super fund board being made up of employers and half being members of a union. I have looked at the AustralianSuper trustee board photo and there's a very young Billy Shorten and, prior to coming to this place, a Mr Doug Cameron and a Mr Greg Combet. We see that, with these industry funds, maybe it's a pathway to parliament.

The ACTING DEPUTY PRESIDENT ( Senator Leyonhjelm ): Senator McAllister?

Senator McAllister: Mr Acting Deputy President, you might remind Senator McKenzie that she ought to refer to Mr Shorten and Senator Cameron by their correct titles.


Senator McKENZIE: My apologies. I did say prior to coming to this place, it's Mr Doug Cameron. I hope he's no longer on that board, given that he is now a senator. But, yes, Leader of the Opposition Bill Shorten was a member of the inaugural AustralianSuper trustee board. I think what we have to ensure is that we have good governance of the industry superannuation boards.

There is currently $2.3 trillion in the superannuation industry in entrustment for the retirement of Australians, and the majority of that is located within industry super funds. We need to ensure that they are being governed in the best interests of their members, rather than the best interests of the Labor Party and the retirement savings of their members. We want to ensure that Australians have more control over their superannuation providers and a stronger regulator to ensure their money is being managed in their best interests. That is an entirely appropriate thing to do. I know those opposite would like to characterise this as an anti-union measure, an anti-worker measure; it is not. It is about ensuring proper oversight of Australian's hard-earned superannuation, so that it is not funnelled off to people's election campaigns but being reinvested to ensure that their money grows and provides a nest egg for their retirement, which is the entire purpose of the superannuation system. It needs to be managed in their best interests, which is why these proposals will ensure the governance of superannuation industry funds with a third of the board to come from employer groups—let's face it, that is the group putting money into the industry super fund on behalf of hardworking Australians. A third will be from the union movement, and a third will be independent directors. When we look at issues of failure of governance, right across organisations and corporations in this country, many times it is a failure of governance; it is a failure of leadership at the board level to rein in managing directors, to ensure appropriate oversight on strategic plans and to ensure that the organisation is following its mission. The mission of industry super funds should be to maximise the retirement savings for each and every one of their members. It should not be about allowing funding for a variety of campaigns in the Australian Labor Party. I know Matt Thistlethwaite, from the other place, was also heavily involved in industry super funds. I haven't done an audit of ALP senators and ALP members from the other place who have sat on industry super fund boards and compared it to this side of the chamber, but I bet that the other side of politics has many more board members of industry super funds than my side of politics does. We want to put confidence and trust back into the system that that money is being used and spent appropriately.

The superannuation member outcomes package represents important reforms that strengthen the foundations of Australia's compulsory superannuation system, in particular for default MySuper members. The package has been developed with a clear objective to improve outcomes for consumers. Consumer focused reforms make superannuation more consumer friendly and make superannuation providers more accountable for how they use their members' money. You can't just drop it into somebody's election campaign. I know that some of the members—maybe the majority of members—of industry super funds may even vote for the ALP, but, I tell you what—they will not be happy to know the hard-earned money of their blood, sweat and tears, which should be providing for their retirement, is being funnelled into certain election campaigns, here or there—wherever the Labor Party sees a need. It is absolutely inappropriate. Ensuring that our boards are governed appropriately and that we're maximising the return for those hardworking Australians as they enter retirement is the focus of these reforms. I hope the chamber supports what is an equitable distribution of responsibility around the board—a third to unions, a third to employers and a third to independent directors, who come with fresh eyes and no baggage on what is sometimes a very complicated and ideologically driven conversation when it comes to the 'unions v employers' situation. We don't want that sort of argument occurring with the hard-earned savings of Australian workers.

Many of the measures in this legislation have been on the policy agenda for several years and have been recommended by past reviews into superannuation. The proposed parliamentary amendments to the portfolio holdings disclosure measure in the bill will increase transparency by extending the portfolio holdings disclosure to assets held by associated and non-associated pooled superannuation trusts. These changes will guarantee that the assets held by pooled superannuation trusts will be required to be disclosed in respect of each investment option, provided by a registrable superannuation entity licensee, and make it explicitly clear that all investment options are subject to the new PHD requirements. We want to clarify that choice products that have multiple investment options are also subject to these requirements. We want to ensure that superannuation for Australians is very clear and easy to understand. Many of us, myself included, just press the button on the default setting when we start a new job, and we trust that that industry super fund is looking after our retirement savings. There have been some issues where that hasn't been the case. For ultimate clarity we need to ensure that the governance of those boards actually holds true and actually makes sure they are solely and wholly focused not on the re-election of Labor Party candidates in any given election but on maximising the retirement savings for Australians.

There are people in the superannuation industry and system that support the government's reform agenda in this space. I'd like to quote Jeremy Cooper, the ALP-appointed chair of the 2010 super system review. He said to the Senate Economics Legislation Committee hearing on 10 October this year:

… providing for independent directors shouldn't diminish the representation of members but actually enhance it.

This is about enhancing the representation of working Australians in their own industry super fund, so I'm looking forward to those opposite supporting these measures and increasing the input of independent directors into the governance of industry super fund boards. He went on to say:

So, rather than the model being broken, I think this is the 21st-century answer to our highly successful superannuation system—how we can govern it better and, most particularly, how we can make people who are forced to save into it feel confident that the standards of governance is at or near world's best practice.

And shouldn't that be what we're aiming for? We are a developed country. We have a strong financial system. Shouldn't we be ensuring that the $2.3 trillion of working Australians' retirement savings is governed with world's best practice? If the ALP-appointed chair to the 2010 super system review, Jeremy Cooper, can get on board, I call on Labor Party senators to similarly back this legislation, back Australian workers and give them the confidence that their retirement savings are being managed and acquitted for with the highest possible standards, with world's best practice standards for governance.

In the same hearing, Mr Cooper went on to say:

… for funds in the equal representation frame at the moment, the reform is sympathetic to that model in the sense that they merely need to rearrange themselves … to allow for one-third representation by independent directors. To me, that does not disrupt the benefits of equal representation: you still have member representatives and employer representatives—

So no-one is kicking the unions off the table. Let's stop the scare campaign. What we need to do is ensure that, rather than have two sides of what can sometimes be quite a difficult conversation in this country, we have some independent directors there to bring some sanity, some calm and some expertise to the management of Australian workers' industry super retirement funds.

Professor Graeme Samuel was appointed by the board to conduct an independent review into governance arrangements at the CFMEU. The CFMEU trusted Graeme Samuel, a former ACCC commissioner, to look into their governance arrangements. If the CFMEU can trust Graeme Samuel, I wonder why those opposite do not back his evidence to the Senate Economics Legislation Committee inquiry hearing this year into this legislation when he said:

… I don't draw a great distinction between the structures of corporate governance; I'm more concerned about the reality of it.

So let's stop having an esoteric argument about who has more numbers where. Let's actually focus on the reality for maximising the retirement savings of working Australians and giving them the confidence that their hard-earned money and the profits from it are actually delivering for them in retirement. He went on to say:

Where you've got proprietors or sponsors that are heavily involved in the board … there's a tendency for the skills metrics to be less relevant.

Do you know what he's saying? Mr Samuel is basically saying that, when you look at that industry super fund board I was speaking about earlier, with the opposition leader, Bill Shorten, Mr Combet, and, at the time prior to his senatorship, Mr Doug Cameron, the skills metric is not such a great concern, because, really, we're interested in other things. If we went through the board appointments of industry super funds, we would see they're either holding bays for soon-to-be senators or members or, indeed, retirement packages for former senators and former members.

Senator O'Neill interjecting

Senator McKENZIE: Acting Deputy President, I'm seeking your protection from Senator O'Neill.

The ACTING DEPUTY PRESIDENT ( Senator Ketter ): Yes. Order on my left! Senators are entitled to be heard in silence.

Senator McKENZIE: Thank you, Mr Acting Deputy President, for your protection. What Graeme Samuel is actually saying is that there's a tendency for skills metrics to be less relevant; there are other things. When we're looking at who are going to be the union reps on these boards, other things come into play—not the skill sets or the capacity for good governance of the retirement savings of workers. That's where independent directors become much more relevant; it's where the skills metrics and the qualities that they can provide become more relevant. Now, isn't that a good thing? No-one is saying there shouldn't be union representation on the industry super fund board, and nor is anyone saying there shouldn't be employer representatives, but there should be a recognition that, by setting up this type of arrangement for the retirement savings of workers—hardworking Australians who put their money into an industry super fund, which is often the default setting—we're not actually getting the skill set we need to govern the board and deliver on what should be about maximising retirement savings, not making sure we're funnelling money to Labor Party campaigns right around the country.

Let's get real here. If it were about getting rid of union representation on industry super funds, it would look a lot different to this particular set of reforms. These are reforms recommended through a range of inquiries. There was the ALP appointed chairman. Graeme Samuel was appointed to look into the governance of the CFMEU.

Senator O'Neill interjecting

Senator McKENZIE: Senator O'Neill, if the CFMEU can handle his expertise on governance, I don't know why you can't. Maybe I need to look to the senators opposite who looked to the CFMEU for their backing to get into this place. Maybe they'd look a little more kindly. I know that you're not a CFMEU girl, but—

The ACTING DEPUTY PRESIDENT: Senator McKenzie, I ask you to address your comments through the chair, please.

Senator McKENZIE: That is highly appropriate, Mr Acting Deputy President, and so I shall. Thank you for that timely reminder of the standing orders.

The ACTING DEPUTY PRESIDENT: Interjections are disorderly, I remind the chamber, and senators are entitled to be heard in silence.

Senator McKENZIE: Thank you very much, Mr Acting Deputy President, for your protection again. If the CFMEU can back Graeme Samuel, get on board, boys and girls, because this is about fairness and ensuring those boards have the highest quality governance and the skill set that they need. Let's face it, if we look at the membership, you might park someone you are thinking about for a future Senate spot or it might be somewhere you quickly park retiring senators or members who may have no other place to go and still need to pay the mortgage. We need to have at the forefront of our minds, as we address these bills and the measures before us, how we ensure the retirement savings of working Australians in industry super funds are best acquitted. I think that is by increasing the number of independent members on the board.

I could go to more. We've got some support from David Murray and Gene Tilbrook, the acting chairman of the Australian Institute of Company Directors. Fantastic. They might have something to say about good corporate governance and what that might look like. Does it require certain skill sets? Yes, it does. But let's look at what Gene Tilbrook actually said:

A system that is trusted with the retirement savings of all Australians needs the highest standards of governance ...

And that does not mean a 50-50 split; it means ensuring the boards of the industry super funds have the skill sets they need to deliver. We should all be backing that. We should all have in our minds ensuring that we are maximising the retirement savings of hardworking Australians. We can do that by increasing the number of independent directors and the skill sets available to those boards as they make those decisions. Gene Tilbrook closed by saying:

The inclusion of independent directors is widely recognised as a critical element of good corporate governance.

(Time expired)