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 rise tonight to contribute to the debate on the ComSuper Bill 2011 and the Governance of Australian Government Superannuation Schemes Bill 2011. This package of bills is intended to effect a number of changes. Primarily, it will amalgamate all military and civilian Commonwealth superannuation funds; it will merge the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority to form a single trustee body, to be known as the Commonwealth Superannuation Corporation, or CSC; it will establish ComSuper as a statutory agency providing administrative services to CSC; and it will introduce consequential and transitional provisions to facilitate the merger.
These bills were first introduced in a slightly different form in early 2010 and were subsequently amended to slightly improve the board appointment process, following the inquiry by the Senate's Finance and Public Administration Committee. I might add here that, as a member of that inquiry, the small amendment made shows what an effective tool this place's committee system is, but I note that the coalition's dissenting report highlighted far more issues with these bills than were reflected by the small amendments conceded by the government. The amendments conceded by the government included requiring consultation with the Minister for Defence on employer board appointments and requiring that at least one Chief of the Defence Force, or CDF, nominated director be present where a reduced quorum is acceptable and when issues to be discussed relate only to military superannuation.
Although these amendments improved the bills, the bills still contain a lot of bad policy and, in my view, remain unsupportable. This is because the bills still contain provisions which make them unacceptable to the defence and veteran communities and still give excessive power to the ACTU with respect to appointments of CSC directors, termination of CSC directors and quorum arrangements for board meetings.
The government asserts that these bills have been introduced to reform the superannuation industry by consolidating 650,000 members and pensioners under a single trustee board and establish a greater pool of assets for investment purposes. When first introduced early last year, the then Minister for Finance and Deregulation, Lindsay Tanner, stated:
The introduction of these changes reflects the ongoing work within the Government to review and where necessary, reform its own business operations, internal governance and structures just like anybody else.
However, when the consequent reform involves decisions that distort the operation of the board that will govern the newly amalgamated funds, effectively handing the ACTU excessive power to make appointments and excessive voting rights at meetings, the question must be asked: what is the purpose of the changes?
Certainly, it is hard to see a lot of demonstrable benefit in these bills and this question was also asked by the witnesses to the inquiry. The RSL submitted:
… assertions about prospective improvements resulting from the proposed merger are not substantiated;
A review of the four sources of information about the proposed merger of the superannuation boards made available to the RSL has failed to find any factually based reason why the merger must take place.
There were lots of reassuring words … but no hard facts backing up the need for change.
In its submission, the Defence Force Welfare Association stated:
Noting that the Government chose not to consult with DFWA or other Ex-Service Organisations on this issue, DFWA can find no evidence of any benefit, tangible or intangible, to serving or former members of the ADF. Nor can DFWA identify any material or financial benefit to the wider Australian community.
I tend to agree that the government has failed to clear two hurdles regarding the demonstrable benefit these bills will deliver. They are, firstly: it has specifically failed to demonstrate the value of the amalgamation proposal to military and veteran superannuants and beneficiaries; and, secondly, it has generally failed to demonstrate the need for this amalgamation to the wider community, many of whom share the concerns raised by the veterans groups.
I, along with other coalition senators, share the concerns of affected groups and remain to be convinced of the benefit of amalgamating the management boards of military and other forms of Commonwealth superannuation. As already mentioned, coalition senators and I do not consider that the interests of serving and former ADF members are well served by the proposed board composition of the Commonwealth Superannuation Corporation and the way its quorum provisions play out.
These concerns revolve primarily around the relative reduction in the proportion of military and ex-military interests. This concern was echoed in evidence given to the committee by the Returned and Services League, and I quote Rear Admiral Doolan:
Prima facie, if you are increasing the number of board members and you are decreasing the percentage of military representatives on the board, then the military voice must be more muted.
Similarly, at the hearing into the bills, the national president of the DFWA stated:
… the representation on that board will not give adequate voice to the military superannuants, whether they are contributing members or recipient members.
This flaw in the bills is exacerbated by the proposal for the Australian Council of Trade Unions to have the power to appoint three members of the new board, as opposed to only two coming from the military community. Indeed, coalition senators do not support the provisions relating to the role of the ACTU in this bill and will move amendments in that regard.
It is my view that the bills should contain no special provision for ACTU representation on the board. Rather, board members should be appointed by the minister for finance, other than the two representatives who should come from a defence background to reflect the unique nature of military service and the defence community's special circumstances. Even to the extent that the ACTU is provided special board representation, concerns are held about the fact that it can appoint three CSC board members, whilst the CDF is only able to appoint two. If the ACTU is to be given special representation, it should be no more than that given to the defence and veteran community—or, preferably, the military should continue to have its own independent board.
Inexplicably, under these bills, once a director has been appointed by the ACTU, that person can only be dismissed or removed by the ACTU. Even in the case of misbehaviour, physical or mental incapacity, or where the director in question is a habitual no-show to meetings, the minister cannot remove such an ACTU appointed director unless the president of the ACTU agrees. Contrast this with the ability of the minister to remove the five proposed employer directors for any of those reasons and it is clear that such a provision is unacceptable as it gives the president of the ACTU more power over the relevant directors than the responsible minister.
Another concern is the possibility of the ACTU members preventing a quorum, despite some amendments designed to lessen this risk. However, it remains that a quorum is required of nine board members for a quorate meeting of the CSC board—given that there are only 11 members in total, the refusal of all three ACTU members to attend would render any such meeting inquorate. This is simply not good enough and could lead to effective paralysis of decision making in the CSC where decisions are likely to be made where a majority supports them but not the ACTU members. Effectively, it allows the ACTU members to take their bat and ball and go home.
The coalition will be moving a number of amendments to improve these bills, but, even if passed, they will still propose changes that we do not consider to be good policy on balance. As such, these bills should not be supported.
I am really trying to find some merit in the arguments put forward by the coalition. All I can hear is an attack on trade union involvement in superannuation. That is the bottom line and that is what is being argued. Both Senator Cormann and Senator Bushby have spent most of their time arguing against ACTU involvement in the merged fund. We know why they are doing that. It is because they are anti-union. They do not want workers to have the rights to act collectively or bargain collectively, and that has been the history of the coalition.
For Senator Cormann to stand up and cast aspersions on good, hardworking union officials in this country who are on the boards of superannuation funds is an absolute disgrace. It is typical of the smear campaigns that the coalition simply revel in. They do not worry about policy; they do not want to worry about the rights of workers and the interests of workers; they simply want to smear, and they have spent most of their time tonight smearing trade union officials who serve their members' interests on the boards of superannuation funds. Why are they doing that? They are doing it because industry super funds are demonstrated as the best, most effective and best-returning funds for working people in the country. That is why they are doing this.
The superannuation funds provide excellent returns. They consistently outperform other funds in this country and they do that because they are innovative; they do that because they will get trustees who stand up and work for the members. It is not about profitability, it is not about creaming off the profits of the funds into the pockets of well-paid executives. It is about making sure that profits go back to the members, and that is why the coalition have spent their time here maligning honest Australians out there working hard on superannuation funds for their members.
Senator Bushby said he was not sure about the benefits. I was actually on the committee that dealt with this. I think it was very succinctly—
Senator Bushby interjecting—
You were as well, Senator Bushby. Well, again your input was totally unmemorable. That was another unmemorable contribution from Senator Bushby in the committee structure. Not only do the national press not know who he is; he is totally unmemorable when it comes to Senate committees. I am glad you reminded me that you were there. That is right—you were. I have the transcript here and I see your name. I do not see much else, but I do see your name, Senator Bushby.
Dr Helgeby from the Department of Finance and Deregulation was there. Both the Department of Finance and Deregulation and the Department of Defence came and made submissions to this inquiry. I suppose, if what is being put by Senator Bushby and Senator Cormann is the position, we have two senior public servants acting against the interests of Commonwealth public servants and Defence Force personnel. It is an absolute nonsense. To continue to push that approach on the basis of their hatred for the trade union movement does not do them much credit. They do not deserve any credit in this debate at all.
Dr Helgeby said, in the joint submission from the Department of Finance and Deregulation and the Department of Defence, that their submission demonstrates the importance of structural reform for the long-term delivery of superannuation for military personnel and Commonwealth employees. They were talking about long-term structural reform—something that the coalition know very little about. In 11½ years in government, their structural reform was nil. They left this country ill-equipped to face the challenges of a modern-world economy. Dr Helgeby went on to say:
The submission highlights the challenges of maintaining separate trustee boards and provides evidence of the significant potential benefits that would flow to members under a merged trustee and with improved scheme administration.
So what the two departments are saying is that the benefits you get from a merged trustee board include significant benefits for the membership. That is what they are saying. It is not the ACTU saying this; this is two senior public servants putting their position unequivocally and clearly to the Finance and Public Administration Legislation Committee. They said there would be significant potential benefits flowing to members under a merged trustee and an improved scheme administration. What they have pointed out is that the scheme needs improved administration.
For 11½ years the Howard government, in their usual incompetent and lazy manner, did not do anything about this. They were not concerned to try and improve public administration of superannuation. They lazily sat back and hoped the money would keep flooding in from the mining boom so they could say that they were good economic managers, and we all know it was nothing but a front and a farce. They never were good economic managers. Tonight is a demonstration of why they were bad economic managers, because for 11½ years they had an opportunity to merge those funds, to bring improvements to those funds and to make those funds operate more effectively for members of the Defence Force and members of the Public Service. And what did they do? They did nothing. They did not even look at this issue.
Dr Helgeby went on to say that he would talk about the benefits, but there were lots of misunderstandings about how the reforms and proposed legislation would operate. It was last year that this committee took place, and what is quite clear is that neither Senator Cormann nor Senator Bushby have any better idea about the benefits that this will bring to both the Public Service and the Defence Force than they did when Senator Bushby was on the committee. I do concede that he was on the committee, even though he did not make much of an input into the committee. But he was there.
According to Dr Helgeby, the reforms do not change members benefits or death and disability benefits. The bills will deal with structure and governance of superannuation, not with the design of the individual schemes. He went on to say that the reforms would improve efficiency in trustee operations and allow the benefits of these improvements to be passed on to members in the form of reduced costs and, potentially, higher investment returns. Reduced costs and higher investment returns are mostly gained through the benefits of scale, particularly consolidation of funds under management.
The department says that there is clear industry evidence in Australia and overseas that the scale advantage enjoyed by larger funds is substantial. Our joint submission—that is, the submission from the Department of Finance and Deregulation and the Department of Defence—says that this is the appropriate way to go. This is the thing to do to benefit the members of both the Defence Force and the Commonwealth Public Service.
But let us understand that the coalition do not care about the Public Service in this country. They would try to treat the Public Service here as public enemy No. 1, not as public servants. They went to the last election—remember this when they stand up here with their doleful tears about the Commonwealth Public Service—saying they would get rid of 12,000 public servants' jobs. That was their contribution to public service efficiency: slash and burn the Public Service.
Senator Bushby, do not come here going on about your concern for economic efficiency, because you have no credibility in economic efficiency. For 11½ years you did nothing. Do not come here trying to pretend that you are concerned about the Public Service or that you are concerned about the Defence Force, because you have no concern about them. For 11½ years you allowed smaller returns to those public servants and the Defence Force because you did not have the vision or the intellectual capacity or the guts to actually take on a hard issue and deal with it. That is the problem with you lot over there: you are all talk and no action. All you want to do is be negative. You are negative in everything you do. Here we have a joint submission from the Department of Defence and the Public Service saying that this will benefit workers. It will mean benefits in terms of scale, benefits in terms of lower costs and benefits in terms of better returns. And all you can do is come here and criticise the ACTU.
The ACTU and a Labor government actually made sure that workers in this country achieved decent superannuation. That was done in the teeth of opposition from the coalition to provide workers in this country decent superannuation. Many workers back in the early eighties did not have superannuation; you had to be a white-collar worker to get superannuation. Let us not forget that. The first superannuation I got personally was when I became a state public servant in the electricity commission. That was the first time I ever got superannuation. Like many other workers in the electricity commission, when I left the electricity commission to take up a job helping workers as a trade union official I ended up losing tens of thousands of dollars of my superannuation because there was no vesting of superannuation to workers. All you got was your own contributions and the employer kept the contributions that they made for you plus the interest that those contributions made. And that was under a federal coalition government.
It took the Australian Labor Party to say, 'We want to provide superannuation to workers in this country,' and that is what we did. I am proud to say that as a union official I went out and fought against the opposition of the coalition and against the opposition of employers to get industry superannuation into this country. I am proud to say that I was on the board of the Superannuation Trust of Australia as a trustee. I was a trustee of Australian super, one of the most successful funds in this country. I challenge either Senator Bushby or Senator Cormann to step outside the chamber and say publicly what they are saying in here about me as a superannuation trustee in my time as a superannuation trustee or about any other trade union superannuation trustee. Have a little bit of backbone, Senator Bushby and Senator Cormann; get out there and claim that the trustees who are looking after workers' money in this country are ripping the system off and that they are only trying to get their hands on people's money. That is what is underlying this argument.
It is an argument by the extremists in the coalition, who have got absolute control of the coalition. You are an extremist on industrial relations. You are an extremist on superannuation. You are an absolute disgrace. I hope workers see the Hansard of what has been said here tonight . They will soon realise that, when the Leader of the Opposition is out there trying to pretend that he is a friend of workers, the coalition is about ripping away workers' entitlements, ripping away workers' rights to have a say on their own superannuation and ripping away the rights of workers to have representatives in superannuation trusts who understand their needs and understand them. It is quite clear.
Senator Bushby, you hardly mentioned the Defence Force. You came here tonight not about the Defence Force but to mount an attack on the ACTU and ACTU trustees and super funds. That is what you did. We know you are part of the group of extremist young guns in the coalition. We know you are part of that group. You will not stand up for Tasmania against Senator Cormann when it comes to horizontal fiscal equalisation. You will not stand up to them on that issue; you succumb to them. You put Tasmania's rights in the background. You will let Senator Cormann bully you, you will let Senator Cormann intimidate you, you will let Senator Cormann stand over you and you will not stand up for Tasmania. I have seen you in action, Senator Bushby. You are absolutely pathetic. You do not stand up for Tasmania; you let the extremists in the Western Australian branch of the Liberal Party walk all over you.
There is one of the Western Australians, Senator Adams, coming in now to make sure that you cannot say anything about the Western Australian Liberal Party. Senator Cormann does not have the backbone or the courage. If he thought he was going to get the backbone or the courage, in would come the Western Australian senators to make sure that he could not open his mouth. Senator Bushby, you are absolutely pathetic.
I am absolutely proud that I was part of the process that brought superannuation to workers in this country. As a trade union official and organiser I was out there doing it while you were probably out arguing against superannuation for workers. In 1983, 39 per cent of the Australian workforce had superannuation. What were the coalition saying about the rest of the workers, who did not have superannuation? They were saying absolutely nothing. When the trade union movement decided that we would go out and make sure that workers got a fair go in this country, what did the coalition do? They were egging the employees on to stand up against the union movement getting super. So when you come here and bleat and moan about an amalgamation and a strong superannuation fund, you are acting in a purely hypocritical manner.
Senator Cormann has come in. You are now surrounded, Senator Bushby. We have Western Australians to the left of you and Western Australians to the front of you.
Madam Acting Deputy President, Senator Bushby is now surrounded by Western Australians. He will not stand up for Tasmania. If he was daring to stand up for Tasmania, Senator Cormann has moved in to make sure that he cannot stand up for Tasmania. Senator Cormann is here as a minder. He is here making sure that Senator Bushby cannot stand up for Tasmania.
Hearing the attacks on the ACTU tonight we know what they are about. They are about the extremists in the Liberal Party. They are about trying to curry favour with the businesses that would try to destroy the trade union movement. We know what the trade union movement will get, we know what workers will get, if ever the coalition ever comes back. It will be more Work Choices, less superannuation and a bad deal when you go on the job. So do not come crying crocodile tears about superannuation here. The coalition is an absolute disgrace.
I am very proud of Australia's record on superannuation—Labor's record, the labour movement's record and the Gillard government's record—but it is not something we can sit still on. We must make sure Australia has a well run superannuation system so that Australians have sustainable retirement incomes today and into the future.
While we have a good system, it does require some further change, some further tweaking, lest members miss out on the benefits they should be getting because government has not been paying close enough attention to how the system can be improved and better operate. Labor is paying attention but the coalition is not.
In these bills before us we are paying particular attention to improving the governance of the superannuation arrangements of those who serve our nation as public servants or defence personnel. It is but one part of a much bigger platform on which the Labor government's agenda on superannuation rests. Tonight it is about improving and modernising the governance arrangements for the main Commonwealth civilian and military superannuation schemes.
The bills before us give effect to the government's announcement, back in 2008, that it would merge the trustees for the Commonwealth's main civilian and military superannuation schemes—that is, the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board of Trustees and the Defence Force Retirement and Death Benefits Authority to form a single trustee body. There are important reasons for doing this. The government merged these civilian and military trustees with the aim of improving member benefits and service levels. The bills before us bring together a number of civilian and military superannuation schemes coming under a single trustee. I will not read the very long list to you, because I know that has been done before, but I think it is of significance to note that the bill does not impact on the design of the schemes or on members' entitlements, which are protected by separate scheme legislation that cannot be changed by this new trustee. Changes to these entitlements would require legislative action—and rightly so, because it is very important that this legislation and this parliament recognise the unique nature of military service in the Australian Defence Force. We should not contemplate changes to these entitlements without the consent of parliament and recognition of the sacrifices made by the men and women who serve in our defence forces. In other words, parliament should not separate itself from the sacrifices made by our defence personnel and from contemplating the needs of their dependants should they be killed or disabled as a result of their service to our nation. Because of this, there is no change to the existing features and benefits that reflect the unique nature of military service in the Australian Defence Force, such as death and disability arrangements. It is important that there is no change to these arrangements.
Recognition of the unique nature of military service includes a requirement for CSC to have regard to these important issues as set out in the relevant military superannuation legislation. Tonight I would like to acknowledge the ex-service community for their dedication to representing and advocating for the interests of their members on these important issues.
It is important to place in the hands of a single trustee the capacity to consolidate scheme funds, providing the opportunity to access increased benefits of scale. By doing this we should see access to improved service levels and, importantly, improved investment opportunities. It should also allow members of all the schemes to benefit, through lower investment costs and higher investment returns. This is the stuff that Australian superannuation is all about—good, long-term financial investments for members, the leveraging of scale, and good investment decisions and risk management. I am pleased that the Members of the Military Superannuation and Benefits Scheme will be set to gain substantial benefits from this consolidation of schemes.
The Defence superannuation scheme has just over $3 billion in assets, whereas the civilian superannuation scheme has some $18 billion under management. We can see from past industry experience in superannuation that members of smaller superannuation schemes are able to look forward to gains when their scheme funds are consolidated into a larger pool. Consolidation gives smaller schemes much more investment leverage. That is the opportunity that the legislation before us tonight presents. Members of this consolidated scheme will also ultimately benefit from a highly skilled and innovative trustee being responsible for the scheme. It is also important to note that public sector super will increase its presence in the superannuation industry by becoming a larger and less divided fund. It will be able to operate more strategically in the interests of its members and attract quality and experienced staff and board members.
The senators opposite choose to challenge the quality of those board members, with which I disagree. The union movement has underpinned good industry superannuation funds in this nation for many years. The board will have 11 members, and both military and civilian interests will be represented. In this sense the board is very similar to many other industry superannuation boards, which include representatives from the industries in which its members work. The Chief of the Defence Force will be responsible for nominating two member directors, three member directors will be nominated by the President of the ACTU, and there will be consultation between finance and defence ministers on suitable candidates for the five employer director positions.
So it is clear—and we have had many examples of this from speakers opposite—that the key reason the coalition is so opposed to this legislation is union involvement in the board. The simple fact is that unions and the labour movement have been key drivers of the creation of a superannuation system that serves all Australians, not just a privileged few. Superannuation used to be for a privileged few. But now, thanks to Labor's ongoing commitment to good superannuation, millions of Australians can enjoy a much higher standard of living and a far more secure future. Key to delivering this outcome has been the involvement of unions advocating for their members and combining financial savvy with knowledge of their members' needs.
We have had an ideological attack from senators opposite on this legislation, based on the fact that not all workers are members of unions. This is completely beside the point, as unions have brought good corporate governance to superannuation, and they have done this successfully because they are there to serve their members, just as a good superannuation fund should do. So there will be representatives on the superannuation fund serving the whole of the membership. They do not have a narrow membership base. They will be on the board to represent all members of the fund. They will not be driven by their own financial reward but by reward for members. Industry superannuation funds have served their members very well and will continue to do so. I believe we will see a good example of that in the fund proposed by the legislation before us tonight.
It is very important that the government do the right thing by our public servants and its serving defence force men and women. Tonight we have an opportunity to improve superannuation benefits for the majority of people in uniform in our country. However, in contrast, the opposition in this parliament are opposing a set of bills that would increase the take-home superannuation of over 90 per cent of our serving members. It is a crying shame.
By 2050, one in four Australians will be over 65. We know that longer term challenges such as the ageing of our population, as well as recent events of the global financial crisis, underscore the need for Australians to have access to quality superannuation schemes and a secure financial retirement beyond pensions. Tonight, we have an opportunity to make a small contribution to the good governance of such superannuation programs and I commend the bills to the Senate.
I am pleased to close this important second reading debate on the package of legislation to improve and modernise the governance arrangements for the main Commonwealth civilian and military super schemes. I want to briefly go over the main purpose and features of the legislation. None of the bills change the design of the civilian and military super schemes or member entitlements. Each civilian and military superannuation scheme will remain separate and continue to have its own benefits and entitlements as set out in its enabling legislation. For example, the military schemes will maintain their own legislative base and existing features and benefits that reflect the unique nature of service in the Defence Force such as death and disability arrangements.
The Governance of Australian Government Superannuation Schemes Bill 2011, the governance bill, seeks to improve the level of member benefit service levels and governance of the main civilian and military superannuation schemes by establishing the Commonwealth Superannuation Corporation as the single trustee for these schemes. CSC will be formed from a merger of the existing trustees for these schemes. The consolidation will enable CSC to pool all the civilian and military funds under its management to access increased benefits of investment scale. Industry experience suggests that the members of the Military Superannuation and Benefits Scheme have the most to gain from such pooling due to the small size of its fund relative to the civilian funds. For example, it is estimated that a half a per cent increase in the net investment return for a member of the RAAF who joins as an officer cadet and rises through the ranks to group captain at retirement would lead to an increase in the superannuation benefit of $95,000 over a full career or $41,000 over 10 years of service. There would be benefits, but of a smaller order, to members of the Commonwealth's main civilian superannuation schemes.
The governance bill incorporates a number of suggestions from ex-service organisations that are aimed at protecting the unique nature of military service. This includes a requirement for CSC to have regard to the unique nature of military service, as set out in the relevant military superannuation legislation, when it is performing a function under that legislation. CSC will have a governing board that includes representation of both civilian and military interests. However, each director of the CSC board, regardless of whether they have been nominated by the Minister for Finance and Deregulation, the Chief of the Defence Force or the president of the Australian Council of Trade Unions, will have an overriding obligation to act in the best interests of all scheme members. In order to further protect the interests of members of military schemes, at least one director nominated by the CDF is required to be present when the governing board is considering a matter related solely to these schemes.
The ComSuper Bill 2011 makes complementary reforms to the governance structure of ComSuper that are aimed at improving superannuation administration for the benefit of current and former members. In particular, the ComSuper Bill establishes ComSuper as a statutory agency for the purposes of the Public Service Act 1999, consisting of a chief executive officer and staff. ComSuper will be a prescribed agency for the purposes of the Financial Management and Accountability Act 1997.
The Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011, the consequentials bill, supports the reforms in the governance bill and the ComSuper bill by making consequential amendments to a range of other Commonwealth acts and puts in place required transitional arrangements. An important consequential amendment has been made to the Defence Force Retirement and Death Benefits Act 1973 to strengthen recognition of the unique nature of military service by mandating the establishment of a Defence Force case assessment panel. The panel will have military representation, including representation nominated by the chiefs of each of the three services. The chair of the panel will be one of the directors of the CSC who was nominated by the CDF. The consequentials bill also amends the Superannuation Act 2005 to facilitate public sector employees being able to consolidate their savings under the management of one trustee.
Overall, the package of bills reflects the government's ongoing commitment to provide efficient and sustainable superannuation arrangements for Commonwealth employees and military personnel, and to protect these features of military superannuation that recognise that military service is unique and different from civilian employment.
The critique in this debate is reflected in the amendments but the focus in the debate has been on the nomination of the trustees. A longstanding rule was established when we passed the Superannuation Industry (Supervision) Act 1993. I was actually in the parliament when we passed the legislation. In fact, I was a member and chair of the Senate Select Committee on Superannuation which dealt with the legislation and I was involved in some of the design features. Section 10 of the SI(S) Act, on page 17, has a very important principle—that is, equal employee and employer representation. Employee and employer trustees are nominated by the respective organisations. This is true of industry superannuation funds. Some are fond of criticising these as union funds, which they are not; they are industry funds. They are multi-employer funds with equal trustee representation, usually nominated by employer and employee or trade union organisations, with a two-thirds voting rule. It is also true of corporate superannuation funds. It is true of all APRA regulated funds and the SI(S) Act applies to them all in this regard. It is a very important principle.
The opposition are arguing that the Minister for Finance and Deregulation should appoint the considerable majority of trustees. That is what the opposition are arguing and they are wrong. It is wrong in principle and it is contrary to the spirit of the SI(S) Act. It is contrary to the equal representation rule that we have in this country, which, despite some of the criticism from those opposite, has worked overwhelmingly in the best interests of members. The equal representation rule and the two-thirds voting rule are absolutely critical. Without further comment, I urge the Senate to pass the legislation without amendment. Question put:
That this bill be now read a second time.
The Senate divided. [21:26]
(The PRESIDENT: Senator Hogg)
Question agreed to.
Bill read a second time.