Monday, 20 June 2011
Governance of Australian Government Superannuation Schemes Bill 2011, ComSuper Bill 2011, Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011; Second Reading
Debate resumed on the motion:
That these bills be now read a second time.
I am pleased to have this opportunity to speak on these bills: the Governance of Australian Government Superannuation Schemes Bill 2011, the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. These bills will reform governance arrangements for Commonwealth government superannuation schemes in line with trends in the broader superannuation industry. They will also serve to modernise some aspects of these arrangements. The purpose of these bills is to improve the superannuation arrangements for the men and women currently serving in the Australian defence forces.
Since I assumed my current responsibilities I have had the opportunity of meeting many of these fine Australians and I have acquired a better understanding of the uniquely difficult tasks with which we task them. We have an obligation to see that their service and their sacrifices are appropriately recognised, and one way to do that is to ensure that the superannuation arrangements we put in place for our service personnel are the very best possible. This legislation demonstrates the Gillard government's commitment to improving the superannuation arrangements for our service men and women under the Military Superannuation and Benefit Scheme.
These bills will increase the superannuation returns for the majority of our serving members. In fact, they will increase the take-home superannuation of over 90 per cent of our current serving personnel as well as future members of the ADF. Let me give an example. An increase of 0.5 per cent in the net investment return for a member of the RAAF who joins as an officer cadet and retires as a group captain would lead to an increase in superannuation benefits of some $41,000 over 10 years of service or $95,000 over a full career.
Recently in the Senate we have seen a series of shameless stunts by the opposition in relation to the retirement income of our Defence personnel. Senator Ronaldson has brought in a private member's bill which seeks to change the method of indexing Defence pensions for certain categories of Defence retirees. In the course of so doing, he has been highly critical of the government for not supporting his bill. Of course, what Senator Ronaldson has not explained to the Senate—nor, I might say, to anyone else—is why the Howard government, of which he was a member, did absolutely nothing about this issue for the whole 11 years it was in office. He has not told the Senate that the Minister for Veterans' Affairs in the Howard government, the Hon. Mr Billson, commissioned a report on this very matter. Nor has he told us that this report, the Podger report, recommended against the course of action which the opposition is now putting forward and that Mr Billson accepted that report. He has not explained why he went to the 2007 election supporting a policy which was the very opposite of the one he now purports to support. I am still waiting for the opposition to explain their extraordinary inconsistency on this issue. In government, they accepted Mr Podger's finding that changes to the indexation system for Defence pensions could not be justified. Now, in the safety of opposition, they have discovered that all of this is a monstrous injustice for which the Labor government is obviously to blame.
Senator Ronaldson and his colleagues have some explaining to do. I am, of course, astonished to find that they are opposed to the simple and straightforward improvements to our Defence superannuation arrangements that are contained in these bills tonight. Last week it seemed vitally important to them to change the system for indexing Defence pensions, because our military retirees were suffering erosion of their standards of living, but, this week, when the government brings in legislation that would bring about an increase in superannuation benefits to the average ADF member of perhaps $41,000 over 10 years or $95,000 over a full career, they are opposed to it. This is quite astonishing and I think it is a real insult to the intelligence of the men and women of the ADF and the wider Defence community. How can Senator Ronaldson and others in the opposition possibly imagine that the antics of last week and their position tonight will not be matched against one another?
What grounds are the opposition using to oppose these bills tonight? Apparently it is because these bills provide that the ACTU will nominate three members of the board of the Commonwealth Superannuation Corporation. What a shocking idea that is! The vigilance of the opposition is truly extraordinary! The notion that the peak body representing Australian employees, an organisation with more experience of administering superannuation than anyone else in the country—indeed, it lays claim to inventing modern superannuation—should have a voice on the governing body of the main Australian government civilian and military superannuation schemes. Well, how remarkable!
So now we know what the real priorities of this opposition actually are. We know that pursuing their obsessive and irrational vendetta against the Australian trade union movement is far more important to them than the welfare and standard of living of our retired public servants and Defence personnel. What a marvellous juxtaposition this is with their outlandish rhetoric of only last week.
The Liberal Party is, after all, the party that brought us Work Choices and would, of course, bring us 'Son of Work Choices' if they ever got back into power. They are opposed to anything which brings benefits to employees. But I am sure that current serving members of the ADF will note that the opposition is trying to deny them the very real benefits of this legislation on the basis of what can be described as nothing more than an ideological vendetta.
Let us now return to the bills which we are debating. The Governance of Australian Government Superannuation Schemes Bill 2011 implements the government's decision to establish a consolidated trustee for the main Australian government civilian and military superannuation schemes. The consolidated trustee body is to be known as the Commonwealth Superannuation Corporation. The CSC will be a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997. The bill requires the governing board of CSC to have regard to the unique nature of military service as provided for in the schemes established by the relevant military superannuation acts when it is performing functions under those acts.
The bill will also provide for the CSC to be governed by a board, in line with the common model in the broader superannuation industry. The board will comprise 11 directors—a chair, five member directors and five employer directors. The ACTU and the Chief of the Defence Force will nominate three and two member directors respectively. This representation is consistent with the size of funds in the scheme—$19 billion in the civilian scheme and some $4 billion in the military scheme. The Minister for Finance and Deregulation, after appropriate consultation, will choose the five employer directors. The minister will consult with the Minister for Defence in selecting suitable candidates for these positions. By merging the existing civilian and military superannuation trustee boards into the CSC, this bill will improve the economies of scale to generate potentially higher investment returns and lower investment administration costs and combine all of the funds under the management of a single trustee board. These changes will be of significant benefit to military scheme members because of the smaller size of the military superannuation benefits fund—as I said, some $4 billion—as compared to the civilian schemes—as I said, some $19 billion. Without this consolidation, members of the MSBS, who comprise over 90 per cent of current serving ADF personnel as well as all future serving personnel, will be disadvantaged as superannuation industry funds continue to consolidate. This would reduce the MSB fund's ability to obtain good investment value and, of course, good value with respect to fees.
The ComSuper Bill 2011 implements the government's decision to modernise and clarify the governance of administration arrangements for the above schemes. It does this by establishing ComSuper as a statutory agency under the Public Service Act 1999 and replacing the Commissioner for Superannuation with a chief executive officer.
The Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011 amends a range of Commonwealth legislation to take account of the new trustee arrangements and the changes to governance of administrative arrangements. It also includes transitional arrangements to facilitate these important changes. The reforms will also, through consolidating funds under management and reducing administration costs, improve the superannuation returns to members, particularly defence superannuants.
After these bills were announced, the government became aware of some concerns held by ex-service organisations about some of their provisions. As a result, the government has introduced amendments to address these concerns. The following changes were made: first, amendments were made to recognise the unique nature of military service. A new objects clause and an amended functions clause were included to require the trustee to have regard to the unique nature of military service when performing a function under the military superannuation legislation. Second, the bill was amended to provide that at least one board member appointed by the Chief of the Defence Force must be present when the board is considering a matter related solely to the military schemes. Third, the establishment of the Defence Force Case Assessment Panel has now been made mandatory, with the legislation prescribing its membership. Previously the legislation gave CSC discretion to establish this panel to review decisions which are the current responsibility of the DFRDB Authority. I notice you are nodding, Madam Acting Deputy President Moore. You are obviously very familiar with these questions. Fourth, an amendment was included to provide for consultation between the finance minister and the defence minister in relation to the five employer directors of the board. This is in addition to the Chief of the Defence Force being responsible for nominating two member directors of the board.
Let me conclude by saying that the government is doing the right thing by its current serving Defence Force men and women as well as those who will serve into the future by providing the superannuation benefits for the majority of those in uniform. We have consulted with military and ex-service organisations and made several amendments in response to their concerns to further recognise the uniqueness of military service and to make changes to the operations of the trustee board when they consider military matters. This is positive legislation that will provide further support for our men and women in uniform. It is a great pity, though hardly a surprise, that this opposition, who do nothing but oppose for opposition's sake and who engage in the most irresponsible and hypocritical kind of stunting on the issue of Defence pensions, should be opposed to this worthwhile and uncontroversial legislation. They are doing so solely because of their consuming hatred of the trade union movement. They should stop. They should reconsider their attitudes and place the interests of our ADF personnel ahead of their own lonely ideological fixations. I commend the bill to the House.
The coalition does not support these bills. The reason we do not support these bills is that this government is completely obsessed with ensuring that its friends in the union movement get overall control, on this occasion over military superannuation and military pension arrangements. Why would it be, when only 41 per cent of public servants are members of a union, according to ABS data, that 100 per cent of employee representatives on the board created under this legislation will be ACTU nominated representatives?
Forty-one per cent of public sector employees are members of unions; 59 per cent are not. The majority of public sector employees choose not to be part of a union. Yet 100 per cent of employee representatives on the board to be created under this legislation—a board which also has responsibility for military pensions and military superannuation arrangements—will be ACTU representatives. Not only that, but also the ACTU president is the only one who can nominate employee representatives of the board. The Minister for Finance and Deregulation, who has responsibility for ComSuper, is not able to dismiss any of them without getting the agreement of the President of the ACTU. Why is that appropriate? I do not think that any reasonable person in Australia would think that that is appropriate.
This is yet another example of the Labor Party looking after the vested interests of the people who put them here. Every single senator representing the Labor Party in this chamber and every single member of the Labor Party in the House of Representatives has to be a member of the union, courtesy of the constitution of the Labor Party. That is why the unions have a stranglehold over the sorts of decisions that are made by this government on issues like this. It would be much more appropriate for employee representatives on the board created under this legislation to be much more representative of the diversity of employee interests, including the 59 per cent of employees who choose not to be a member of a union. But, no, they have got to use their time in the sun, their time in government, to make sure they lock in as many benefits as possible for the vested interests of the union movement. This is about lining the pockets of the union movement, yet again, at the expense of the public interest.
During Senate estimates we asked questions about the current Aria board. This is the board that looks after all of the public sector superannuation arrangements. There are seven people on the board. Three are guaranteed positions to be dominated by the ACTU. But guess what? It just happens that four out of the seven representatives on the Aria board are representatives of the unions, so the unions have got the numbers on the Aria board. Why is that? Because, other than the ACTU nominated positions, the government has made it its business to make sure that it puts another union representative on the board. You can laugh, Senator Feeney; I know that that is a matter of great amusement for you.
Through you, Madam Acting Deputy President: Senator Feeney may well laugh; he may well find this amusing. He might not think that it is appropriate to have superannuation trustees on those boards who are focused on the best interests of members of the funds, irrespective of whether or not they choose to be members of unions. He might not think that it is important for the 59 per cent of public servants who choose not to be members of unions to have a voice on these bodies. He might find that very amusing, to the point where he dismisses as an ideological hatred for unions any concern that the coalition expresses. Through you, Madam Acting Deputy President, I say to Senator Feeney: I do not have any hatred for unions whatsoever. The coalition does not have hatred for unions. But we think it is entirely inappropriate to have legislation setting up a corporate governance structure for super funds which entrenches a completely unrepresentative model where 41 per cent of employees who choose to be members of a union happen to get 100 per cent of the employee representative positions on the board.
These are serious matters. In the broader superannuation industry, this government has been very reluctant about and in fact has opposed many of the recommendations arising out of the Cooper review to improve corporate governance arrangements in the superannuation industry. Why? Because the union movement does not like it. The union movement does not like recommendations that improve transparency, corporate governance and integrity—things like superannuation trustees should declare foreseeable conflicts of interest to APRA if they want to sit on multiple boards; things like the requirement to have independent directors on superannuation boards. This government has a pattern when it comes to superannuation: whether it is in the Public Service or in the private sector it is guided by one thing, and that is to protect and to pursue and to be an agent for the vested interests of the union movement. This legislation is a very sad example of this.
The minister talks about—I am sorry, Madam Acting Deputy President, I have promoted Senator Feeney—
The parliamentary secretary talks about the significant benefits of scale. We actually explored that with APRA, the regulator, during Senate estimates. APRA said that there is absolutely no evidence of the so-called benefits of scale—in particular, if you put the ACTU in such a dominant position over the funds not only of public servants but also of our defence personnel.
We have raised these concerns with the government and they of course are pressing ahead with this current model. The reason we have expressed those concerns to the government is that those concerns have been expressed to us very strongly, in particular by representatives of the defence community. We understand that the government cannot afford to do the wrong thing by the ACTU because the ACTU have a hold over them. The ACTU would not allow them to press ahead with changes that in any way undermined their stranglehold over the Commonwealth superannuation arrangements into the future. The reality is that the government should come up with a governance model which is more representative of the diversity of public sector employees' backgrounds and perspectives.
These bills establish ComSuper as a statutory agency consisting of a CEO and staff. The bills merge the existing trustees for the Commonwealth civilian and military superannuation schemes into a single trustee body, the Commonwealth Superannuation Corporation. The function of ComSuper is to provide administrative services to the Commonwealth Superannuation Corporation, with the CEO of ComSuper appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence.
The Commonwealth Superannuation Corporation will be trustee for all of the existing Commonwealth superannuation funds, including the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Public Sector Superannuation Accumulation Plan, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Force Retirement and Benefits Scheme. The Commonwealth Superannuation Corporation Board will consist of 11 members appointed by the Minister for Finance and Deregulation, with five employer directors chosen in consultation between the finance and defence ministers, three members nominated by the President of the ACTU, only two members nominated by the Chief of the Defence Force and one independent chair.
The reason that the coalition continues not to support these bills is because, as I have mentioned, the ACTU has completely disproportionate representation on the board and is the exclusive representative of public sector employees on that board. The current legislation still contains provisions which make it unacceptable to the defence and veteran communities. Although the bill now contains a reference to the unique nature of military service, the bill's other inclusions, particularly with regard to the disproportionate ACTU representation, mean that military members' interests are not properly represented or safeguarded. The bill still gives excessive power to the ACTU with regard to appointments of board members, termination of board members and quorum arrangements for board meetings.
I will just go through some of these issues in detail. With regard to ACTU representation on the board, why should the ACTU, as I have mentioned before, have 100 per cent of the employee representative positions on the board when only 41 per cent of public sector employees are in fact members of unions? This gives a completely inappropriate and privileged benefit to the union movement ahead of proper representation for the 59 per cent of public sector employees who choose not to be members of a union.
Defence superannuants should retain their representation of directors on the board due to the unique nature of military service and the defence community's special circumstances. Why should the ACTU have more employee representatives on this board than the defence community? Currently the ACTU is able to nominate more directors than the Chief of the Defence Force. The defence and veteran communities believe that military representation on the board under this legislation should be at least equal to that of the ACTU or, alternatively, that the military should continue to have its own independent board. Why is it that the minister cannot dismiss an ACTU-nominated director? The legislation currently provides that the minister for finance cannot remove an ACTU-nominated director unless the president of the ACTU agrees. This is even in the case of misbehaviour, physical or mental incapacity or if the director is absent from multiple meetings of the board. That is an extraordinary position. It is an extraordinarily privileged position to be given to the ACTU and it is simply courtesy of the fact that the ACTU calls the shots with this government. Between the ACTU and the Greens, all of the decisions are made in the back room.
We know that Senator Cameron enjoys the positions adopted by the Greens much more than the positions adopted by his own Prime Minister. We know that because he said so. We know that Senator Cameron is very concerned about the fact that he is not allowed to speak his mind anymore inside the Labor caucus. We know that because he said so. Senator Cameron has told us about the problems with Labor senators 'getting a lobotomy' and 'becoming like zombies', not able to speak their minds. I am sure that he is going to be even more passionate in his defence of the union representation on this Commonwealth superannuation board, irrespective of the fact that they are not actually representative even of a majority of public sector employees.
The thing I really do not understand is that ACTU members, under this legislation and under the corporate governance arrangements set up by this Labor government, can prevent a quorum being reached. For some reason, the quorum under this legislation is said to be nine members. Nine members are needed at a board meeting for decisions to be made. That means that the three ACTU-nominated directors on their own can prevent a meeting from validly being held. Combined with the provisions preventing the minister from dismissing an ACTU-nominated director, this legislation gives the ACTU extraordinary powers and a completely inappropriate level of corporate governance control over Commonwealth superannuation funds.
I would say to Senator Feeney, through you, Madam Acting Deputy President, that this is not about an ideological hatred of unions. For example, in Victoria a couple of weeks ago, we had the circumstance of a mooted merger between Vision Super and Equipsuper. That merger was falling over. Why was it falling over? Because the union-nominated directors on one of the funds were concerned about the proposal for direct election of the board in the merged entity and they were concerned that there was no guarantee of nominated directors on the board of the new entity.
Superannuation fund trustees are supposed to act in the members' best interests. They have a fiduciary duty to act in the members' best interests. Yet the union representatives on that board, in making a decision to not support a merger going ahead on the basis of a lack of assurance there would be a continuation of union-nominated directors, were not acting in the best interests of their members; they were acting in direct and obvious self-interest, in the interests of the union movement. They were protecting their positions. So what is being done about this?
There is absolutely no guarantee under the arrangements being put in place that the interests of 59 per cent of public sector employees who are not members of a union will be properly looked after. The ACTU representatives on that board will have a vested interest in making the best possible arrangements for union members in public sector employment. This concept that somehow it is appropriate for 41 per cent of public sector employees to get 100 per cent of the employee representative positions on the board to be created under this legislation is extraordinary. There is no proper or rational explanation as to how that is in the public interest. The only explanation that we can reasonably come up with is that this government is captive to the directions of the union movement. They have told you that that is what they want. They are insisting on it. They say: 'Yeah, go ahead with this merger. Give us more power. Give us power over more of the Commonwealth superannuation arrangements. Make sure that we can get on top of the military super so that we can get our hands into that. But don't dare weaken or dilute the influence that we have over the public sector superannuation arrangements, even though we represent less than half the superannuants that are being covered under this scheme.' I am talking about 41 per cent of current public sector employees. How many retired members would still be members of a union?
This is a government that is completely conflicted when it comes to putting forward recommendations around the corporate governance arrangements for Commonwealth super. This government should be embarrassed at the complete inappropriateness of this legislation they have put forward. But, the way things have been going over the last 12 months or so, it seems that this government does not get embarrassed about anything anymore. They are just pressing ahead to lock in as many advantages for the vested interests they represent in this chamber and in this parliament as they possibly can in the time that they have remaining in government. They want to make sure that as many vested interests as possible are locked in to legislation before the Australian people can formalise their loss of trust and confidence in this government—the serious betrayal that this government has imposed on them on things like the broken promise not to impose a carbon tax on them.
This legislation should not be supported by the Senate. I worry that, given the changed dynamics in the Senate that are around the corner, and given that the government now will have the majority and control of the Senate with the support of their alliance partners the Greens, I do not have much confidence that bad legislation like this will get proper scrutiny in the Senate as it would have done in the past. Sadly, the place for appropriate scrutiny of government legislation will no longer be the Senate; it will be the House of Representatives, because the government—not having a majority—will be able to make proposals, but ultimately it will come down to whether they are able to convince crossbench members of parliament to help them get legislation through the House of Representatives. In the Senate, I suspect the Greens will on various issues jump up and down and express concerns but in the end vote with the government no matter what. That is the way things will go in the Senate moving forward.
This is bad legislation. It is bad policy. It is completely self-interested—it is driven by a desire to institutionalise the vested interests of the Labor Party, acting as agents for the union movement. This legislation aims to entrench a corporate governance structure which gives 41 percent of public sector employees 100 percent of the employee representative positions on the board it will create. It will merge all the Commonwealth superannuation arrangements, including the military superannuation arrangements, into one organisation.
Of course, Labor senators get very touchy over all this. First we had Senator Feeney laughing and smiling, and now we have Senator Feeney and Senator Sherry talking loudly between themselves. They do not take this issue seriously. They probably feel embarrassed about the fact that they are putting legislation forward which is in the interests not of the public but of the ACTU and the broader union movement. They are probably embarrassed that they are here acting as the agents of the union movement, putting forward legislation that will entrench a seriously conflicted corporate governance structure, including military superannuation arrangements—a move which is, of course, entirely inappropriate—into the future. That is why we will move an amendment to seek to improve this very bad legislation; but we do not believe it will be passed. (Time expired)