Wednesday, 15 June 2011
Governance of Australian Government Superannuation Schemes Bill 2011; Second Reading
I rise to speak on the ComSuper Bill and related bills dealing with the package of measures to rationalise and bring together arrangements for military and civil superannuation of Commonwealth employees. Despite the substantial exercise of the rhetorical technique known as 'attacking a straw man', which we have just heard from the previous speaker, the question before the House this afternoon is a straightforward one. The question which is before the House is whether the particular administrative arrangements which are proposed under this package of bills make sense compared with the status quo, under which there are separate and distinct funds for civilian and military employees of the Commonwealth.
The purpose of this package of bills is to bring together all of the Commonwealth military and civilian superannuation funds, including the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Forces Retirement Benefits Scheme. There will be a single trustee body formed called the Commonwealth Superannuation Corporation, and that will replace the existing distinct bodies: the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority. This package of legislation also establishes ComSuper as a statutory agency, which will provide various services to the Commonwealth Superannuation Corporation.
As I have indicated, the question before the House is whether this set of administrative arrangements to deal with superannuation for both military and civilian employees and former employees of the Commonwealth is a sensible set of arrangements, whether it is to be preferred to the arrangements which presently exist or whether this House ought to reject this set of arrangements. The view on this side of the House is that the arrangements which have been put forward ought to be rejected. That is so for three fundamental reasons. Firstly, we disagree with the central premise underlying this legislation that military and civilian superannuation arrangements ought to be brought together. Secondly, we believe that even if we could get over that particular hurdle these arrangements make inadequate provision for specifically representing the distinctive and unusual requirements of current and former military personnel as regards their superannuation needs. The third reason we consider this legislation ought not to be passed is that a privileged role is created for the Australian Council of Trade Unions in the governance arrangements, and that is a role about which we are deeply suspicious.
I will start with the issue of principle. Does it make sense to merge the superannuation arrangements of current and former military employees with current and former civilian employees? We argue that that does not make sense. To proceed on that basis is to fail to take account of the unique nature of military service, including at its core the risk—which is assumed by all who serve as uniformed personnel in our military forces should they be assigned to a theatre of war—of early death or incapacitating injury. Reflected in that is the requirement, in administering the superannuation arrangements of current and former military personnel, to bring to bear specific expertise about the needs of current and former military personnel and about the issues which are of concern to them. Under the present arrangements there is specialist military knowledge and capacity which applies in the governance of the superannuation schemes which have been established to assure the retirement incomes of military personnel. The loss of that specific military knowledge and capacity is a clear cost of the arrangements which are proposed for the consideration of this House. We say that there is no adequate offsetting benefit to justify the incurring of this cost. Further, we are particularly concerned that this set of administrative arrangements will contribute to a blurring, in the eyes of the parliament and in the eyes of the Australian people, of the critical distinction between military service and civilian employment. We are worried that the unique conditions of military service will be, in the administrative application of these arrangements, subordinated to and subsumed by civilian conditions of service.
Secondly, even if it were not for that fundamental point of principle—which we on this side of the House consider to be absolutely central—the specific arrangements which have been proposed, which are before the House today, give wholly inadequate representation to the unique and special interests of members of the funds who are current or former serving military personnel. As has been pointed out by other speakers, under these arrangements there will be two board members of the Commonwealth Superannuation Corporation who will be appointed by the Chief of the Defence Force. This quota is outnumbered by the three board members who are appointed by the Australian Council of Trade Unions—appointees, it need hardly be added, who are most unlikely to have any familiarity with or affinity for the unique nature of military service. This is a set of arrangements which wholly fails to take account of the specific and distinctive needs of the members of these funds who are current or former serving military personnel. The point is made very clear, I think, when you compare it to the present arrangements, which do secure adequate representation on the part of those with a military background. For example, the Military Superannuation and Benefits Scheme has a board of five trustees who are appointed by the Minister for Defence Science and Personnel or by the Chief of the Defence Force. The Defence Force Retirement and Death Benefits Scheme is run by the DFRDB Authority, which has five members. One is the Commissioner for Superannuation and the other four are appointed by the minister assisting the Minister for Defence and by the chiefs of the three armed services. That is to say, under the present arrangements there are specific mechanisms for ensuring adequate representation in the governance of these superannuation funds by people who have knowledge of and familiarity with military matters.
At the very least, in the arrangements that are before the House today we would have expected to see a separate board giving representation to the members of the funds who are current or former serving military personnel and ensuring that there are people on that board with appropriate knowledge and expertise. I make the point particularly that these arrangements are likely to result in both current and former service men and women becoming more remote than they are at present from decision making in relation to their superannuation funds—decision making which is critical to their own personal financial futures. That will be particularly the case for former service men and women who are no longer employees of the Commonwealth and for those who are not members of a union or other employee organisation. It is of particular concern that these arrangements would leave people in that circumstance feeling that their interests are less likely to be adequately represented than they are under the present arrangements.
Let me turn to a third and equally fundamental area of concern which the coalition has with the arrangements embodied in this legislative scheme. These bills propose to create a unique and privileged role for the Australian Council of Trade Unions in the governance of superannuation for current and former military personnel and current and former civilian employees of the Commonwealth. This raises many questions. Why should there automatically be representatives of the ACTU on this board? What particular competence, expertise, specialised knowledge or capability do representatives of the Australian Council of Trade Unions have in managing financial assets with a view to maximising future financial performance in the interests of members of the funds? On what possible policy basis would you quarantine specific places on this board for representatives of the ACTU? Why would you possibly do that, unless of course you are a government determined to do the bidding of one set of narrow, sectional interests in the community—namely the union movement?
I am sorry to say that the only explanation which can be found for this curious proposal is that we have a government once again determined to look after its mates in the union movement. There has been very little attempt to justify these remarkable governance arrangements. There has been very little attempt to come up with any theoretical or philosophical base for giving the union movement privileged access to decision making in relation to these funds. These funds, of course, will contain some members who have a civilian background and some who have a military background. Very many of them will have no affiliation with unions at all. Very many of them may have no appetite at all for having the union movement looking after their retirement savings, but they are given no choice under this government. They are compelled to have their own vital financial interests, the management of their superannuation funds, under the supervision of a board which has a quota drawn from the ACTU.
This is a particularly retrograde piece of policy. This is a piece of 1970s corporatist thinking that I would have hoped had disappeared into the past, along with the days when Frank Sinatra could come to Australia and be turned around by the union movement because he had insulted a journalist and the result was that all relevant unions immediately went on strike. On the specific question of the capacity of these ACTU representatives to bring to bear specialised knowledge and experience in relation to military matters—something of high importance to a significant proportion of members of these funds—it is clear that there will be no such experience, no such capacity.
When one looks at the details of these governance arrangements, it is frankly bizarre that the ACTU representatives will in many circumstances be unable to be dismissed by the minister without the specific consent of the President of the Australian Council of Trade Unions. This is a wholly inappropriate approach to an important question of governance. An equally inappropriate aspect of these arrangements is that in practical terms they would allow the nominees of the Australian Council of Trade Unions, if they were to caucus beforehand, which I suspect is very likely, the capacity to even deny a quorum to this board so it could do no business. The arrangements set out in this legislative package are not supported on this side of the House. They are not in the best interests of the military members of the fund, nor the civilian members. (Time expired)