Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

Let me just say that one of the few things that the Rudd Labor government got right was to commission the Cooper review into superannuation. After superannuation in the more modern form with compulsory superannuation and so on had been in place, it was quite appropriate for there to be a strategic and comprehensive review into how the system was operating and how the system could be improved. One of the central recommendations that the Cooper review made was to ensure that there was appropriate provision of independent directors—at least a third independent directors on relevant super funds boards.

We took this policy to the last election. We said that we would ensure that this policy would be implemented and, as a result of this bill, super fund boards will be required to have at least one-third independent directors and an independent share. The changes will not apply to self-managed superannuation funds—obviously, people in those are looking after their own affairs.

The changes in this bill will align governance and superannuation more closely with the corporate governance principles applicable to ASX-listed companies. This will increase the proportion of independent directors of superannuation funds and ensure that directors with the best experience and expertise are represented on superannuation boards, enhancing decision making and producing better outcomes for members who are minimising the costs to the superannuation industry. Not only did the Cooper review come to the conclusion that this was necessary; the Financial System Inquiry also concluded after consulting widely that superannuation fund members would benefit from greater independent representation on fund boards.

These changes represent international best practice. As a result of the changes, superannuation fund members will benefit from international best practice governance with independent board members in line with the governance arrangements applicable to other financial institutions regulated by the Australian Prudential Regulation Authority. This is appropriate as superannuation fund members' contributions are frequently compulsory in nature and less accessible than the funds held on behalf of depositors and policy holders in banks and insurers.

This bill will apply to all APRA-regulated superannuation funds. With these funds, member balances involve compulsory payments, access only upon retirement and management of the funds by someone other than the member. These considerations do not vary, if the fund is a corporate industry, public sector or retail fund. Bringing governance arrangements into line with international best practice, requiring independent directors on all boards, best ensures that decisions are made in members' best interests and not in the best interests of others.

I can see that there is some furious last-minute lobbying going on at the back of the chamber of Senator Muir. I have to say: I found Senator Muir's speech in relation to this very compelling. The government has put, obviously, a set of proposals on the table with this bill. I am proposing, at the conclusion of this second reading debate, to put this bill to a vote for the second reading and then adjourn before we go onto the committee stages. There will be the opportunity for further conversations with all interested parties on how this bill can be further improved, and let's get back to it next week perhaps.

I completely reject the notion that this is somehow a terrible sneak attack on unions or employer representatives and the role that they have historically played in industry funds. This is driven by improving corporate governance standards. This is driven by a desire to ensure that the corporate governance arrangements in superannuation across the industry move into the 21st century, and that the increasing diversity of people who are members of superannuation funds have the confidence that the corporate governance arrangements maximise the focus on their best interests in making sure their retirement savings are safe and that investment returns are maximised.

Senator Muir, a very good speech—I found your arguments very compelling; they certainly align with the way the government is looking at this particular public policy issue. The arguments that Senator Conroy made were either false, like the proposition that truck drivers and timber workers would not be able to serve on these boards—that is just wrong.

The suggestion that we should rely on Senator Conroy's experiences in 1992 as a superannuation officer in order to make a judgement in 2015 on the merits of this bill just proves everything we need to know about this. Senator Conroy is still stuck in 1992. We actually have a responsibility to look after the interests of people across Australia in 2015, and we need to make sure that the corporate governance arrangements help ensure that happens.