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Monday, 4 December 2017
Page: 9464

Senator RUSTON (South AustraliaAssistant Minister for Agriculture and Water Resources) (13:07): I too would like to make a contribution on these two very important bills, the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 and the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017. I stand here today because I think these two bills are tremendously important to every Australian, when you consider that a substantial amount of their salary or wage every week goes towards superannuation. This system was designed many years ago to make sure that we as a country could support our workers in their retirement, to give them the flexibility to look after their own interests on retirement. At least 9.5 per cent of every Australian's wage or salary goes into their superannuation account.

Our younger generation, especially, will have the benefit of this kind of superannuation for their entire working lives; unlike you and I, who possibly haven't had that luxury. It just so important for these young people. It seems to me a tremendously reasonable thing to expect a very high level of transparency, accountability and oversight to make sure that that massive amount of money—I understand we have $2.5 trillion worth of funds—is managed in a manner that maximises opportunities for young Australians, and for all Australians, when they retire, because they will rely on the returns of these superannuation investments.

Our ageing population and the lengthening time spent in retirement continue to reinforce and underline the absolute importance of us making sure that we do the very, very best we can to ensure that those people who have been entrusted with this money do the very best they can to make sure that it is managed and invested in the way that is likely to deliver the best possible return. It seems pretty reasonable that we should be expecting a level of transparency and accountability that equates to the magnitude of the amount of money that they have available to invest.

One of the things that I've heard in the contributions from the other side is a suggestion that these particular measures, these two particular bills, are in some way unfairly targeting one component of the superannuation industry. Having had a chance to have a quick look through these bills, it seems quite clear that every superannuation fund, no matter whether an industry fund, a union fund or a banking fund—whatever it is—will be required to meet the same requirements of transparency and accountability. Every measure applies equally to every fund. I'm a little bit confused as to why we would be suggesting that this is in any way unfair or unbalanced, in terms of the debate that has been ensuing on the other side of the chamber. As I said, I would think that anything that strengthens the level of accountability and transparency in anything that we do as governments or anything that we do on behalf of other members of the public can only be a good thing. To suggest that one group or one type of product is being unfairly targeted, or that one type of product is superior to another—once again, it is really important that everybody gets an opportunity to have a level of understanding of what's going on here.

There are a number of measures that are included in the two bills, and Minister Fierravanti-Wells has just gone through, in quite significant detail, the various schedules in the legislation. The request or the suggestion that there should be a level of independence of the people that sit on these particular boards—and, as I say, this is trillions of dollars worth of people's money that we're handling here and looking after—does seem to me to be a reasonably sensible measure that we should be considering. To suggest that the employees that sit on some of these boards are the ones who are actually delivering that level of independence—I suppose you would have to start questioning the level of independence that some of the people that are purportedly there as employees are providing to the board. You have to consider that they're at a level within the organisations that they have come from that is much higher than the average everyday worker. I mean, we're not talking about people who are miners, timber workers or retail and hospitality workers; those aren't the people that are being put forward as the employee representatives onto many of the these organisations. We're talking about people at the level of chief investment officer.

When you look through a number of the people who are on these boards in these particular roles, they are actually making massive amounts of income. My understanding is that the median salary received by these particular chief investment officers on the funds averaged out at about $420,000. My understanding is that there were a series of bonuses that were paid in addition to that sort of money. In the case of UniSuper and AustralianSuper, the bonuses in the 2016-17 financial year totalled three-quarters of a million dollars. We're not talking about people who are at the grassroots, who actually understand what the difference between having superannuation and not having it means. For that reason, the government believes that these reforms and the presence of independent directors on these funds' boards can serve no other purpose than being beneficial to the delivery of a good outcome for all workers. To that end, it's somewhat puzzling why those opposite would suggest that this isn't a good thing to do.

I now turn to the level of transparency, accountability and oversight that is being suggested in the first of these two bills, the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017. Overall, it's designed to enable the people who are investing in these organisations to have a greater level of granularity, I suppose, in seeing what's actually happening within the organisation, and so to have a greater capacity to see where their money is being invested and how it's being invested, and, most particularly, to give them the opportunity to have some oversight as to when money is being spent outside of what we would consider direct investment. I would suggest that the majority of Australians whose money is in these funds would actually think that the money was all being invested in assets that were returning on that investment—stocks, shares, property and the like. I would suggest that it is very unlikely that many Australian workers would actually think that a superannuation fund would be, for instance, spending huge amounts of money on sponsorship or on marketing.

Whilst there may be some very good reasons for spending money on sponsorship and marketing for a super fund—we all know that marketing is a legitimate business expense, and that sponsorship also has a role to play—I don't think it's unreasonable for those sorts of expenses and expenditures to be made publicly available to the people who are putting their money in. They can, first of all, see what it's being spent on, and then decide whether that's a sensible thing to be spending it on. I think the AEC has stated that around $53 million has been paid to trade unions over the past 10 years from these funds. This would suggest there is every reason that it should be made publicly available. If the funds can demonstrate the value to their members, and the members are convinced of the value of the this kind of sponsorship or marketing expenditure—well, that's all fine. But I think they have every right to know. Particularly when you're talking about the kinds of sums that we're talking about here, they have every right to know.

The expectation that a super fund is required to disclose what it's spending—and to disclose and demonstrate to its members that what it is spending is in the best interests of all of its members—doesn't seem to me to be an unreasonable thing. I call on everybody in this chamber to stand up and tell us why, if they think that that isn't a good thing. It's all well and good to say that we need to do these things, but we have to give the power to an oversight body to make sure that they are being delivered.

In the case of superannuation, the Australian Prudential Regulation Authority, APRA, is the appropriate body through which we need to determine that this level of transparency is being upheld: to require that there is a level of oversight and supervision, I suppose, of funds; to allow APRA to go into super funds and ask them questions about how they're spending their money; to ask them questions about what their investment strategy is; and to ask them to justify to why they believe that their investment strategy is the best investment strategy in the current economic climate. For the fees that are being paid—for not just the board fees but for all of the fees that get paid within the organisation—once again, there needs to be a capacity for APRA to go in there and ask questions as to whether the level of fees and the levels of payments are appropriate for that type of activity, and whether they are value for money for the people whose money we're investing. Obviously, insurance arrangements are very important. APRA should have the ability to ask questions of super funds in relation to their insurance arrangements.

Those are just a few examples of things that I would think it would not be unreasonable for a member of a super fund to be expecting the prudential regulator to have the ability to go in and ask about. The most important thing is for the regulator to have the ability to take action if they think that the operation of any super fund is not necessarily in the best interests of its members. Once again, it strikes me as tremendously reasonable that an independent regulator has the power to ask simple and obvious questions—questions that anybody in this chamber would think they should have the right to have answered—when you consider that it's the money of the people of Australia, the workers of Australia, which is being invested here. I think it's entirely reasonable that they should not only have the right to be able to ask questions about how it's being spent but also have the confidence and the security to know that the regulator has the power and the capacity to be able to go in and, if they believe that the actions of any super fund are not in the best interests or it is not delivering the best outcomes, take action. Once again, I fail to see why you couldn't accept or support that as an option.

There is the requirement for direct accountability to the members—to the people who are actually paying the money. If I were investing in a business or a publicly listed company, I would have every right to turn up at least once a year to ask questions of the board, the chief executive and the management team about the performance of that company throughout the year. So I think it is completely reasonable for members—bearing in mind, nobody has to turn up to a corporate AGM, so nobody has to turn up to an industry fund or a superannuation fund AGM—to have the right to attend an AGM, if they wish to. It is entirely reasonable to ask a superannuation fund to have an annual general meeting, just like a publicly listed company, because it empowers members to have greater involvement and a greater say in what's happening with their super fund.

These are just three simple overarching improvements that we are seeking to make through the first of these two bills, the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017, and I am absolutely at a loss as to why everybody wouldn't be overwhelmingly embracing these changes. As a government, we are very keen to make sure that there is a level of transparency because, to be perfectly fair, when you see cases like Chiquita Mushrooms or Clean Event, they raise questions about the operations and the integrity of the actions of some of these funds and the unions, and what they are doing here. So I would have thought that having broader transparency and accountability would protect everybody in this space, and everybody would be able to say: we have strong, rigid infrastructure in which we operate and, to that end, we can be confident that everybody's best interests are being looked after.

Equally, with the second of these bills, Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017, as I said briefly in my opening remarks, to ask for one-third of the directors of a superannuation fund to be independent seems pretty sensible to me. If you have a look at corporate Australia, there is a trend towards independent directors. This is for a whole heap of reasons, not the least of which is that it gives the board a greater range of skills and experiences to enable it to perform better. Nobody could disagree that the broadest and best range of skills that you're able to bring to your board does nothing but accentuate value to the board; it certainly doesn't detract from it. To suggest that a third of the board directors on super funds be independent strikes me as a fantastic opportunity for these funds to be able to get some skills that they may otherwise not get, because it is compulsory. In no way does this actually alter the balance between employers and employees and how they are represented in these funds. We can still have a level of equity. We're just suggesting that one-third of them need to be independent so we can bring in some skills that otherwise may not be available to these boards, if they are restricted in their membership criteria. To say that one-third of the members can't be union officials, can't be bank executives and need to be free from conflict sounds pretty sensible to me. Free from conflict—you can't be a beneficiary of a sponsorship, for instance, from one of these super funds and sit on the board; and you can't come from a financial institution. I suggest that, like the first bill, all this bill serves to do is strengthen the protection for everybody, to give a greater advantage to those superannuation funds. Once again, I'm really surprised that anybody in this chamber wouldn't seek to support the bill. As I said to start with, we're talking about the vehicles through which compulsory superannuation is invested in Australia on behalf of all taxpayers. In any other circumstance you would think that the core goal of the organisation entrusted to do that would be to try to deliver, through the operation of the institution, the best possible outcomes in terms of return on investment to people whose money they have been entrusted to invest. Why would you throw away any opportunity—as these bills are offering to those funds—to enable those funds to be strengthened, to be more transparent, to be more accountable, to have greater scope and to have access to greater skills? It really does defy common sense.

The question that many Australians should probably be asking of those who will vote against these bills is: 'Why are you voting against these bills?' If you genuinely have a reason for voting against these bills, not just some sort of myth that this is some 'go get the unions' type of activity, then you need to come out and tell me why strengthening accountability, transparency, governance and providing additional skills and access to those skills can possibly be a bad idea. On the basis of believing this is absolutely in the best interests of every single Australian who has a massive investment in their future, in their retirement, in these superannuation funds, I stand here today to commend both of these bills to the house.