Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Hansard source

Exactly! The member for Lowe throws me a good line when he asks, ‘What has he said lately on it?’ Unfortunately, the Treasurer has said nothing, and it would be a real tragedy if he is not being true to his word. Not so long ago, when the Intergenerational report came out, he was using it almost like his personal manifesto. He talked about this great challenge for the next 40 years—visionary words but we are yet to see visionary policy or action. I have to say that I am concerned about what that means for the future, particularly if you look at the latest budget: the huge spend by government, the opening up of the coffers and the throwing out of money, sprinkling it over Australia and hoping that it hits the political mark with our seeing nothing such as some serious work on the direction given by the Intergenerational report, which is very much supported and understood by the Labor Party.

Labor were the builders of superannuation. It was the Labor Party that saw well into the future and had a grand vision, a great vision, of ordinary working people being independent in their retirement and having good, solid retirements—people who would normally not have the capacity to access the income or funds that would provide for them in their retirement years. So Labor have always been the builders and have always had the visionary policy to deal with these issues, and I do not think anything has changed today. Labor are still committed to superannuation and we believe it should be much better than it currently is. The nine per cent is certainly a good position and a good start, but we certainly need to move forward from that.

I, as a Labor member, the Labor Party itself, the people who have supported us and ordinary people should be very proud of the work that Paul Keating did that very much led the super debate. He worked hard to try to get people to understand how important it is to save for your retirement, to put something away to make sure that you are not left to your last resort, the pension. Thank God the pension is there, but living on it is a meagre existence and a difficult position for most. People lucky enough to have paid off and own their home, to have their own vehicle and to have no other debts to speak of can get by on the pension, but we know it is very difficult to do so. All of the members of this House, whether they are on this side or on the government side, fully appreciate the difficulty that people on the pension generally have in trying to still lead a normal, decent life while being on the bare minimum. So I think it is opportune that this bill has come up tonight.

The bill has a number of purposes. One is that it revises and consolidates the governance arrangements for the Commonwealth Superannuation Scheme, the CSS, the Public Sector Superannuation Scheme, the PSS, and the Public Sector Superannuation Accumulation Plan, the PSSAP, and that will take effect from 1 July this year. The bill enters the House in response to the Review of the corporate governance of statutory authorities and office holders. This is part of the Uhrig review, which reported in mid-2003. The Uhrig review was appointed to look at the governance practices of statutory authorities and office holders. Of particular interest to the review were those agencies which impact particularly on the business community.

While it was not a completely wide-sweeping review, it was still an important one that identified a number of very important aspects and discrepancies in the accountability, management and operation of those super funds that I have mentioned. In particular the objective of the review was to identify issues in relation to existing governance arrangements and to provide policy options for government to gain the absolute best from their statutory authorities and office holders in those authorities and to deal with the accountability frameworks and how they operate within those particular funds.

The review found that the Financial Management and Accountability Act 1997 should be applied to statutory authorities, and it recommended that these organisations be governed by a chief executive officer. The review also found that the Commonwealth Authorities and Companies Act 1997 should be applied to statutory authorities and that these organisations should be governed by a board. These are sensible recommendations and I do not think anyone would question them, and certainly we support them. The review also found in general terms that agencies that exclusively manage Commonwealth appropriations should be represented and governed by a CEO and board structure. That was favoured in terms of a strong commercial focus towards an organisation or if the agency happened to be an intergovernmental agency.

The main recommendation of the Uhrig review was in relation to the optimal size of statutory authority boards. The review recommended that a public sector board size should be between six and nine members. Currently the boards overseeing the Commonwealth’s superannuation schemes are all different. There is no consistency in how they operate and there are a number of inconsistencies in the sizes of the boards. For example, the Commonwealth Superannuation Scheme board has seven members and the Public Sector Superannuation Scheme board has only five members, and the PSS board is responsible for the operation of the PSSAP as well. Following the release of the Uhrig review, the Department of Finance and Administration recommended that the Public Sector Superannuation Scheme board be increased from five to seven members and that consideration be given to the establishment of a single board for the CSS, the PSS and the PSSAP. Again, these are good, sensible proposals.

The proposed merger of the CSS and the PSS boards has several advantages. A number of things that will be of benefit will be the reduced complexity and the dilution to a simpler and much more accountable board with a better format and a much more transparent and accessible style of operation and administration. The simplified administration is very important.

If you made a comparison with industry super funds, you would see that they are certainly run well. I do not think there are any particular issues in terms of their practices, but certainly inconsistencies and a number of management and administrative issues could always be improved. If you have a look at the performance of industry super funds, and there are quite a number of them, you can see that they are exceptionally well managed, particularly some of those that are run by unions. They are excellent funds and are models within the superannuation schemes and funds industry. I think there are some good lessons to be taken from the way that unions run their schemes and how effective and profitable they are for their membership in the services they provide. There are lessons in the way they are administered and the way in which their boards are run. It always gives me great confidence to know that these funds are managed in the way they are.

Another area of importance relates to conformity and pulling Commonwealth superannuation investments into line with the best practice principles identified in the Uhrig report. That link between what happens in industry funds and what happens in Commonwealth superannuation investments needs to be strong in terms of how they are administered and their performance. The Uhrig review dealt with those issues.

Concerns were raised in relation to assets of the three schemes that would be joined together and managed as one trust. The government has given assurances that this will not happen. So the government has looked at this issue and we are confident that that will be the case. It is also important that the investments of the three schemes are separately managed as the age profiles and the rates at which members of the various schemes retire are different. There are different needs in the different schemes. The schemes really are unique in their provision of services, and I think it is important that this unique provision of services be dealt with separately. They should have their own management and their own boards, and they should be accountable in that fashion so that there can be no question on the transparency, the complexity or the issues that arise because of differences in the way they are administered.

Consultation on this bill has been conducted and an agreement reached that satisfies all members of both the current boards. The bill has no financial implications for the Commonwealth, which I am sure the Commonwealth is very happy about. Labor supports the bill, which I said earlier and other speakers have also said, and it does provide us with the opportunity to look at superannuation more generally.

Quite interestingly, in relation to the budget, with which I started, there are sweeping superannuation changes from the government, in particular to the 15 per cent exit tax. It is thrown at us every day that this is a great change from the government. It is certainly applauded and it is a good change, but I think there could have been a better change. More interesting than that, though, is the number of people that it will affect. That is certainly a key point here.

The impression I got on the day was that this was a massive change that affected everybody—that it had a 100 per cent impact. On closer examination, if you dig just below the surface, you will find that most Australians are not affected at all by the 15 per cent exit tax. I will be very generous and say that we were slightly misled; certainly, we were not led in the proper direction on this. The truth of the matter is that around 85 per cent of people never pay the exit tax—and it is important that we note that. Most people do not have enough superannuation to meet the cut-off limit of $129,750. So, even though they might have been rubbing their hands together on budget night and thinking it was all solved and done, they are not affected by it. It is not just the complexity of the Australian superannuation system that is a problem. The day after the budget speech, the Treasurer, Mr Costello, said:

… you don’t need a financial adviser to get into superannuation … can I say to you one of the reasons why people have been going to financial advisers is the end rules have been so complex. Once we sweep those away then I don’t think you will need a financial adviser at the end of the superannuation chain either because you will know this one thing, that your superannuation will come out of the fund tax free.

See this speech in context