Jill Hall (Shortland, Australian Labor Party) Share this | Hansard source

I stand here tonight to support the Future Fund Bill 2005, but in doing so I must express some concerns. Whenever this government introduces legislation of this kind, I am always overwhelmed with feelings of missed opportunity. That is what I think this legislation is, to a large extent: a missed opportunity. The establishment of a Future Fund could have been embraced. If this government had a real vision, it would have been a lot more than what we have before us tonight. Time and time again this government brings in legislation which is flawed in one way or another. I believe there are some serious flaws in this legislation, in addition to it being legislation that is a missed opportunity.

This bill grants the Treasurer and the finance minister the power to credit cash amounts to the Future Fund through a special account and to transfer financial assets to the fund. Transferred funds are to come from realised cash surpluses, including seed capital of $18 million and proceeds of any future asset sales. Whenever I hear this government talking about asset sales, I cringe. I think, ‘What can they sell next?’ Some of the things I think they are looking at selling include Medibank Private. There has already been a scoping study done, and I am very concerned about that proposal to sell Medibank Private. Then there is the Snowy hydro-electric, the Submarine Corporation and the list goes on. If it is not tied down, this government will sell it. Everything is up for grabs, and everything is up for sale.

The bill quarantines all fund assets for the purpose of making provision for the government’s unfunded superannuation liability. This is where it becomes very narrow. The simple fact is that this government is focusing on the unfunded superannuation liability rather than having a wider vision, rather than looking towards what previous speakers have talked about: an infrastructure fund. I would now like to turn to the Treasurer’s budget speech last year, where he set the ground for this legislation. He stated that the Australian government’s task:

... is to begin saving for the future to meet the costs of our ageing population.

We have had the Intergenerational report; now we have the Future Fund. At every opportunity this government has to talk about an ageing population, it does so from a negative perspective.

I believe that, along with some cost factors, the ageing population of this nation also creates opportunities. I believe this government has failed to grasp those opportunities—rather, it is fixated on the cost factors. When you can look at any issue in only one dimension, you are going to miss opportunities for a very long time to come and those missed opportunities will have an enormous impact on our nation. The Treasurer goes on to say that the Future Fund will be funding liabilities that have already been incurred and:

Earnings will accumulate in this Fund and it will be safeguarded by legislation.

Here is the legislation, and I think it really misses out on some of the safeguards that are needed.

The fund will be overseen by a Board of Guardians, consisting of a chair and six part-time members. It is a body corporate. The board will hold fund investments in its own name for the Commonwealth. Ostensibly this will provide a separate legal identity to manage fund investments, but the independence is undercut by the responsible minister issuing the investment mandate—a collection of ministerial directions to the board regarding the investment fund. Every time legislation is introduced into this House, we see the potential for it to be manipulated and we see the hand of the minister in there. These directions are to be tabled in the parliament but they are not to be disallowable—so, once again, the parliament will have a limited ability to consider them. We on this side of the House are not surprised by that; we are used to this government’s approach to all issues: the minister involved being able to manipulate, whether it be a fund or a controlling body, and then the parliament not being able to properly scrutinise or debate legislation. The board will decide, within the limits of its ministerial directed investment mandate, how the fund is to be administered and the agency will do the investing.

You might ask what the fund can invest in. It can invest in financial assets, including overseas financial assets. Telstra shares can also be transferred to the fund. This raises the issue of Telstra and what the transfer of the Telstra shares to the Future Fund means. I have some concerns about that. We would all be very aware of the fact that the government has already made comments about this in the parliament. The Treasurer, at the time the legislation went through, stated that he thought that Telstra funds could be transferred to the Future Fund. A transfer of Telstra shares to the fund is not a Telstra sale scheme because the Commonwealth will retain beneficial ownership of the shares. A Telstra sales scheme is a scheme designed to achieve a transfer, or progressive transfer, of all of the Commonwealth’s remaining equity in Telstra to other persons. Mr Deputy Speaker, I ask you and the House to consider that. However, a transfer of shares to the fund does affect the Commonwealth’s regulatory power to control Telstra. Under the Telstra Corporation Act 1991, the government retains a power of ministerial direction until the Commonwealth share of Telstra drops below 15 per cent.

You might ask why the government is so keen to transfer the Telstra shares to the Future Fund. I do not think that you have to be too suspicious to come up with some answers to that question. The 2005-06 MYEFO assumes that Telstra will be sold for $26.6 billion in 2006-07. It is hard to see this happening, because the average share price of $4.13 is too low. Secondly, it is hard to see that the local and international markets have an appetite for 6.446 billion Telstra shares in one year. The government may decide not to sell or to part sell Telstra simply because it is not in their interests to go ahead with the full sale. You have to be very suspicious of where the government is going in relation to this issue.

I would like to highlight some of the issues that I think are areas of concern. There are a few main points. Firstly, the Board of Guardians is not at arm’s length from the government and will be at the beck and call of the government. Have we not seen that time and time again with legislation that we have looked at in this House? Either the government has the ability to become involved in the operation of and influence the board, the minister has the power to override the board or there is a lack of transparency. I feel that this is quite a big issue that needs to be looked at when we are considering this legislation. I understand that the New Zealand legislation was the model that this was based on, but unfortunately the government has not adopted all the aspects of the New Zealand model. If they had adopted all those provisions then we would be debating a much better piece of legislation today. It would have much better safeguards in place and I would have far fewer concerns than I have today. The Board of Guardians will not operate with the same protection as other public sector superannuation bodies, such as the PSS, where the board of trustees is independent of the government and required to act only in the best interests of members—the prudent man rule. That is what I have been talking about.

Secondly, it is too easy for responsible ministers to terminate the appointment of a board member if their performance is unsatisfactory. The bill explains what ‘unsatisfactory’ refers to. Once again, this is a means by which board members and the actions of the board can be influenced simply because they are so beholden to the government. Thirdly, the blanket potential ministerial override on conflicts of interest flies in the face of good corporate governance principles. That is what my concerns are all about—the impact that this legislation will have on good corporate governance. What we as a parliament should demand is good corporate governance. What we as a parliament should demand is open and transparent legislation. What we as a parliament should demand is a Board of Guardians that will operate at arm’s length from the government. Unfortunately, I do not believe that we have that before us today. Fourthly, the government has done a reasonable job of detailing qualifications to inform the selection of board members, but there is a lack of detail in the legislation on the investment mandate. Once again, it is very flawed legislation.

I will quickly turn to what I said at the beginning of my contribution: this is a missed opportunity. The government could have used this as an opportunity to invest in the infrastructure of the nation. I have heard previous speakers say that there is no shortage of money for infrastructure. If there is no shortage of money for infrastructure, why has our infrastructure been allowed to run down, and why does this government refuse to invest in infrastructure? I support this legislation, but I do so with some serious concerns and I say once again that this is a piece of legislation that will result in missed opportunities for the Australian people and the Australian nation.

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