Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012. I agree in part with the member for Newcastle, on the point that she made that Australians expect that their superannuation will be managed in accordance with the most appropriate modern corporate governance standards. That is where I diverge from the member for Newcastle. The current climate, with what has occurred and is continuing to occur in this place and outside it, raises the necessity for us to reconsider whether this bill does enough, particularly in light of many of the recommendations in the Cooper review which have seemingly been ignored or, at this point, passed over by the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation.

I think it is time for us to reconsider this because—and the member for Newcastle made this point—there is over a trillion dollars in Australian superannuation. A large portion of that, of course, is held in industry super funds, and in recent days we have seen several examples of concerns raised about the governance of industry super funds. This is an area where the minister is strangely silent in relation to industry super funds and the recommendations of the Cooper review. The first of the examples I refer to is a contribution yesterday in this House by the now Independent member for Dobell, where he said:

She—

meaning Kathy Jackson—

sat on the board of HESTA, collecting board fees for many years, rarely attending meetings. But when the union decided the board fee should go to the union, she left the board.

The second examples are two stories which appeared in the Australian newspaper. Last Friday there was an article by Hedley Thomas headed 'Unionist took cash from developer amid $30m super investments'. There was a follow-up story in the Weekend Australian by Hedley Thomas which was headed 'Strategy doubts as union super fund gets burnt'. Those stories raised several very concerning allegations about the use of workers' money which has been invested in industry superannuation funds.

We know from the statement by the member for Dobell yesterday that there are concerns that have come to light, I think to the surprise of nearly all members of this House. The extent to which workers' money has been used for inappropriate activities that has come to light has surprised all of us. In that sense, I think it is an opportunity for this parliament to reconsider the strength of this bill, and I call on the minister to indeed reconsider the strength of this bill and to reconsider whether he should look more deeply at the Cooper recommendations in relation to directors' obligations when it comes to industry super funds.

We know we have hit upon a bit of an issue because, when the Leader of the Opposition was reported to have made comments in the coalition party room earlier this year in relation to this issue, the following day the person who had benefitted more from industry super funds in their life than anyone in this country, Mr Garry Weaven, was reported as rejecting the comments as:

… mightily insulting and a slur on the employer groups equally represented on fund boards alongside union officials.

What's his implication: that the employer associations are being duped? It's like a return to the worst days of 1980s bigotry.

Indeed, it seems to me that, when there is a reaction from someone who has benefited so much from the current regulations relating to the matter, given what we have heard about the HSU in recent times, the HSU disease may have had a far wider effect than what people could possibly imagine. Therefore, it raises questions as to why the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation has not acted more quickly in relation to some of the recommendations made by Mr Jeremy Cooper as to the obligations of directors when it comes to industry super funds.

My colleague the member for Bradfield, who has been raising some of these issues in a very considered fashion in recent weeks, wrote in the Financial Review:

Of the 16 self-branded “industry super” funds, less than half disclosed fees paid to individual directors in annual reports.

We also know that, contrary to good corporate governance standards, directors can sit on multiple boards, and we know that does occur. We know that the Secretary of the AWU, who spoke at the Press Club today about his fantasies of taking Australia back to some socialist operation, sits on multiple boards, as does the former secretary of the ACTU and several others. We know that when Cath Bowtell, who was the Labor candidate in Melbourne, lost the last election to the member for Melbourne, she was then appointed CEO of an industry super fund. So there are quite a number of issues relating to the operations of industry super funds and their directors which are conveniently forgotten in this bill.

My erstwhile colleague the member for Bradfield also made a point in relation to this matter in another article he wrote in the Financial Review late last year, where he said 'in the federal cabinet reshuffle on Monday' the new Minister for Employment and Workplace Relations 'retained his responsibility for financial services and superannuation.' He continued:

This only makes sense if you understand the attraction to successive Labor governments of using the compulsory superannuation system to increase the power, influence and financial position of the union movement and its key personnel.

Given what we have heard in recent days, weeks and months about the questionable practices of some registered organisations—or one registered organisation in particular—in use of their members' money, it raises an increased need for us to reconsider what Jeremy Cooper recommended in that review. There is a litany of examples and much evidence around which says that this issue needs to be looked at with greater consideration.

I refer to another example, which relates to an article, on 17 July 2011, in the Sunday Telegraph, referring to the former head of the Electrical Trades Union, Mr Bernie Riordan. At one point I think he was president of the New South Wales Labor Party. He was being sued by his own members over $1.8 million in fees that he allegedly pocketed while serving on four boards connected with industry superannuation funds. Interestingly, he also had those claims settled just days before being appointed, coincidentally, to Fair Work Australia. In recent days we also heard that one of the people who the member for Dobell mentioned yesterday in his long statement—50-odd minutes worth—Mr Michael Williamson, of the HSU, continues to sit on industry super fund boards, even though a series of allegations have been made, including by the member for Dobell, about some of those issues.

This bill is conspicuous in its silence when it comes to dealing with the issues that Cooper raised in relation to industry super funds. It is the opposition's very strong view that these issues should have been addressed at some length some time ago. As Lyndon Baines Johnson famously said, 'Power is where power goes.' That is exactly what we suspect is going on in this respect.

The member for Newcastle just repeated at length that the Labor Party 'stands for good corporate governance when it comes to superannuation', but that is not backed up by the facts. The regulations relating to the industry super fund network and the directorships in that respect are of course very different to what you would expect with a retail fund. Different standards operate and, with respect to Mr Weaven's allegation against the Leader of the Opposition, of course we include all members of those boards. We say that good corporate standards should be applied to all representatives, whether they be employer representatives or employee representatives. I say again that some of these accusations, allegations and evidence that were presented in the Fair Work Australia report which was tabled just two weeks ago have raised to a new level the possibilities and suspicions about how money can be misused in these organisations and associated entities.

In that respect we think this bill is too weak and that it should be addressing those issues which Cooper raised, rightly, in relation to directorships of industry super funds. For instance, the Cooper review recommended a range of reforms relating to the governance of superannuation which have largely been ignored: that disclosure of conflicts of interest be mandatory, that directors properly disclose remuneration in line with the provisions that apply to publicly listed companies, that there be appropriate provision for independent directors on superannuation funds boards, and that directors who want to sit on multiple boards must demonstrate to APRA that they have foreseeable conflicts of interest.

As I said earlier, we now know that some very senior trade union officials and employer officials also sit on multiple boards. In fairness to Minister Shorten, after much pressure from the shadow minister for superannuation, Senator Mathias Cormann, he finally made some announcements in relation to this issue on 27 April, long after Cooper had found and long after this bill had been drafted. As I say, it was very scant compared to what Cooper demanded.

In that respect, the direct decision that the Prime Minister made, for the first time, allocating portfolios for ministers, which bucketed together the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation cannot be overlooked. That is the first time it has happened. Departments have never been linked before. The excuse given, of course, was that that minister had been responsible for that portfolio for some time. Indeed he had been responsible for that portfolio for some time. But it does just seem a coincidence that the minister who is responsible for regulating trade unions and registered organisations is now also the minister responsible for regulating one of the big income-earners for those organisations. I would put to you, Mr Deputy Speaker, and to the parliament, that there is an inherent conflict in those positions. The Prime Minister should address that conflict because the two should not run together—they have got two very different considerations. I do not think I am the only person who perceives this conflict.

I finish on this point: the coalition supports the best corporate governance structure and regulations that can possibly be in place to protect people's superannuation. It is important for our country that we have a strong savings arrangement for people to look after themselves in their retirement. As our population gets older, we must ensure that people are able to take care of themselves in the best way possible. It is not just through superannuation, of course. It is through a range of their own investments—their own home and so forth. But they must be in that position. So we do support, of course, the best modern corporate governance standards.

We are concerned that this bill is not doing enough. It is not doing enough to address what we see are inequities, are differences between the standards that are applied to other superannuation funds and those of industry superannuation funds. And we know, because of what has been reported by the Fair Work Australia report in recent days, that there has been a range of misuses of hardworking union members' money in respect of the HSU. We do not want to see the HSU disease inflicted on the industry superannuation network. It is a time for us to pause; it is a time for us to give greater consideration to what is in this bill. I urge the minister to give reconsideration to the recommendations that Mr Jeremy Cooper made, to amend this bill, to make the appropriate changes, to crack down on ever-increasing amounts of stories about misuse of workers' money and misuse of the superannuation money, and to do the right thing in this bill so that we can all have guarantees that our industry superannuation funds are governed in a modern and appropriate way.

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