Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

I appreciate the attention that the member for Bradfield pays to the topic of superannuation, but I cannot agree with some of the assertions he made and I feel compelled to set the record straight.

It has been put by him and others that there is no support for a scale test. I challenged that when I said, 'What about the Cooper review's explicit recommendation?' We know the number, don't we, Mr Fletcher? Recommendation 1.6(b) explicitly says that a scale test is a good idea. How is it that those opposite can say that we have not followed the Cooper review enough? Yet when it comes to the test, when there is a specific measure in the Cooper review, which we are implementing, the opposition is strangely struck silent. But it was not just the Cooper review that found that a scale is central to a trustee optimising performance for members; it was the Costello report. Again, the Costello report had input from a whole lot of people from all points of the compass in terms of superannuation policy in Australia and they supported the scale test.

Certainly industry said that they wanted to be reassured as to how the test would operate in practice. That is why APRA has made it clear that it will consult and provide guidance. So we do need to make clear to all those trustees who are being made nervous by some of the assertions of those opposite that APRA will consult about the practical implementation of scale. Furthermore, the policy behind the scale requirement in the legislation is that it sends an important signal to small, poor-performing funds that they need to actively and regularly consider scale as an issue. The member for Dunkley said that somehow small poor-performing funds were receiving more attention than poor-performing funds generally. That is not right. One issue that may need to be considered with respect to small poor-performing funds is their size.

Where a fund conclude that scale is a factor in their poor performance, APRA will be able to ask trustees how they intend to continue to promote the best financial interests of their MySuper members. This may result, for example, in trustees having to proactively seek merger opportunities. My concern is that if those opposite were successful with their amendment, saying that trustees of small funds do not need to consider the context of scale—whether or not having a small fund adds to greater operating costs—then giving people a leave pass on that question sends a signal to funds that they do not have to worry about this matter at all.

Furthermore, we believe APRA would find it difficult to explicitly pursue scale issues through either prudential standards or general supervision of funds if there were a decision to remove the scale requirement from the legislation. That is why we do not support removing the scale test.

If the opposition think that a requirement for funds to look at scale is so important and if they are unsuccessful on that amendment, will they turn their back on better governance in superannuation funds because of one proposition for which there is legitimate, steep support for and interest in the government's position? We await with interest.

See this speech in context