Kevin Hogan (Page, National Party) Share this | Hansard source

The Governance of Australian Government Superannuation Schemes Legislation Amendment Bill 2015 implements two important government decisions: firstly, the 2014-14 Smaller Government budget measure to merge ComSuper, the administrator of the Australian government's civilian and military defined benefits schemes, with the Commonwealth Superannuation Corporation, which is the trustee of the Australian government schemes; and, secondly, the 2014 MYEFO measure to deduct the costs of administering the Public Sector Superannuation Accumulation Plan from member accounts. ComSuper is going to be merged with CSC, the trustee of the Australian government schemes, in line with the Smaller Government Rationalisation Allowance in the 2014-15 budget. A major focus of the government in the last 18 months or so has been to reduce red tape within the Australian economy. From measurements that have been done, we have already taken $2 billion of red tape costs out of the Australian economy. The importance of that cannot be overstated. When people in businesses, including superannuation schemes, are duplicating or doing unnecessary things that have been done by someone else or are not really necessary, that takes people in that business or entity away from doing something more productive. The figure of $2 billion in 18 months is not to be underestimated. This is obviously going to stop the duplication of what has been done within these super funds.

The merger will result in the Australian government superannuation schemes being managed by one government entity. This will improve the efficiency of the arrangements by reducing duplication and overlap. It will also provide the CSC with control over the administration of the Australian government defined benefits schemes, consistent with the CSC's regulatory responsibility for this function as trustees of these schemes.

A previous member spoke about defined benefit schemes and defined contribution schemes. I would like to put it on the record that many of the politicians in here have been elected since 2004 and are therefore not in a defined benefits scheme. Flying around this country, we hear much about the perks that politicians have. Well, a defined benefit scheme is not one of them. We have a defined contribution scheme—different from those members who were here prior to 2004—so I would like to put that on the record as well. I am not saying we should have a defined benefit scheme. We are in line with majority of the population, as we should be; we are in a defined contributions scheme.

Superannuation trustees in the broader superannuation industry commonly provide administration services for the schemes that they manage. The Smaller Government agenda aims to reduce the total number of government entities—and this is happening beyond the superannuation industry— by eliminating duplication and overlap. Ultimately, this agenda is about ensuring that the Australian government is structured and operates in a way that delivers efficient services, robust advice and value for money for taxpayers.

There is a lot of pressure on the three levels of government—federal, state and local government—for services. Those services rely on revenue from ratepayers and taxpayers. With every taxpayer dollar we spend, we have to do it as efficiently as we can and get the best result that we can—and these bills do that in the superannuation industry. Is there a link between the merger and the establishment of the CSC in 2011? Yes. The merger is the next step in streamlining the governance of the Australian government's civilian and military superannuation schemes. You, Mr Deputy Speaker Mitchell, know that this process began in 2011 when the three trustees to the schemes were merged to form the CSC.

Establishing the CSC as the single trustee strengthened the governance of the Australian government's superannuation, improved the efficiency of trustee operations and provided opportunities to benefit from the trustee's resulting increased scale. This has helped to put the delivery of the Australian government's superannuation on a more sustainable and cost-effective footing.

Can I just say: I have been a trustee of an industry super fund, and the amount of information they deal with, the job they do, the due diligence they do and the fiduciary duty they have are very important, and they are to be commended because they are literally making the investment and governance decisions on their members and it is a very important role.

The CSC-ComSuper merger will further improve the efficiency of the management of the Australian government schemes. CSC will be responsible for the overall management of the Australian government civilian and military superannuation schemes following the merger.

I turn to ComSuper staff. This is important. Bills often do have real ramifications for or tangible effects on people. ComSuper staff will be transferred to the CSC's employment by a determination of the Australian Public Service Commissioner under section 72 of the Public Service Act 1999.

As to the statutory officer or the CEO of ComSuper: will he transfer to CSC with the rest of the staff of the organisation? No. The Governance of Australian Government Superannuation Schemes Legislation Amendment Bill repeals the ComSuper Act of 2011 and, in doing so, abolishes ComSuper and the statutory office of CEO of ComSuper. Again, this is just part of the duplication process that will not be there once this happens.

Will ComSuper staff who transfer be employed under the Public Service Act? No. The CSC staff are employed on the terms and conditions determined by the governing board of the organisation, in line with CSC's enabling act, the Governance of Australian Government Superannuation Schemes Act 2011. ComSuper staff that transfer to CSC at the commencement of the merger will cease to be Commonwealth employees engaged under the Public Service Act and will become CSC employees. Again, this is part of the streamlining and efficiency that will come from this bill.

ComSuper staff who transfer to CSC employment will have conditions of employment that are no less favourable than those they were receiving at ComSuper immediately before the merger, and that is an important distinction for them to be aware of. The bill provides for the transfer of the ComSuper enterprise agreement to CSC. It also provides for the accrued entitlements—which are very important to them—of ComSuper staff to be recognised on transfer to CSC employment.

CSC has full membership of the Australian government civilian superannuation schemes. ComSuper staff with membership of the Commonwealth Superannuation Scheme or the Public Sector Superannuation accumulation plan will be able to retain this membership on transfer to CSC employment, and that is obviously exceptionally important to those individuals.

CSC will remain a corporate Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013. The entity will continue to be governed by an 11-member board. The merger will not affect the appointment terms of the existing CSC directors.

CSC will be responsible for providing all of the administration services that are currently delivered by ComSuper in relation to the Australian government defined benefit scheme. This includes, for example, collecting member contributions, maintaining member accounts and paying lump sum and fortnightly pension benefits. CSC will also perform a range of functions that ComSuper currently undertakes as administrator on behalf of the Commonwealth. For example, CSC will pay superannuation benefits from the Commonwealth appropriations and recover debts owing to the Commonwealth arising from overpayment of benefits.

The Australian government has taken steps to help ensure that the merger does not disrupt the management of the Australian government's schemes. The merger is not expected to impact on the administration services provided to scheme members or returns on superannuation fund investments. The Australian government's military superannuation schemes are currently under the trustee of CSC and administered by ComSuper. At the merger, CSC will assume both of these roles. Steps have been taken by the Australian government to ensure that the merger does not disrupt the management of the military scheme.

The bill, importantly, does not change the benefits provided by the Australian government civilian and military defined benefit superannuation schemes. As a lot of people would be aware, people who are on defined benefit superannuation schemes—and, again, I make the point that that is no politician elected after 2004—are very fortunate people. The returns that these people get are not determined by the contributions they make or, indeed, the returns that the super fund gets. They are a very valuable thing for those people. However, in line with the government's announcement in the 2014-15 Mid-Year Economic and Fiscal Outlook, the bill amends the Superannuation Act so that the costs of administration of the PSSap will be deducted from member accounts, consistent with arrangements for private sector accumulation funds.

Negotiations for a new ComSuper enterprise agreement commenced in May 2014 in line with the Australian government's public sector workplace bargaining policy. Should a new ComSuper enterprise agreement be made prior to the merger, it will apply to transferred ComSuper staff at CSC. The change is being made to align the arrangements in PSSap with those of superannuation accumulation funds in the general community. Fees are a very common way of paying for the administration of accumulation superannuation funds. In the general community, members of accumulation funds pay fees. Commonwealth employees who have chosen an alternative accumulation fund, and federal parliamentarians elected since 2004, also pay fees.

The new arrangements require changes to the Superannuation Act 2005 and the trustee made by the Minister for Finance under the act. The bill will make changes to the act to provide that PSSap administration costs are to be paid out of the PSSap fund. Following the passage of the bill, changes will be made to the trustee to provide for CSC to determine the amount of the fee to be paid by PSSap members and for CSC to be able to deduct that fee from PSSap members' accounts.

The changes made by the bill will provide that the consent of the trustee will not be required with changes to the PSSap Trust Deed. This is consistent with arrangements under the government's prudential superannuation framework which provide that the consent of trustees is not required where changes relate to contributions by employer sponsors of a scheme.

The levels of administration fees will vary between accumulation funds. As in the practice of general superannuation industry accumulation funds, the fee will be determined by the trustee of the PSSap. These fees are varied, Mr Deputy Speaker Mitchell, as you are probably very well aware. Some of these funds, depending on the choice that you make, require less or more intervention from a fund manager. If it is in a more of a defensive fund, or if it is in a cash fund, the fees tend to be lower. But, if you are putting your money into a scheme that is more tradable, if you like, or is going in and out of different growth things, the fees tend to be a little bit higher because, where the money is given to the people to manage those funds, their fees are higher, so that has to be paid by the member.

With the savings, very importantly, as I have mentioned, we are a government that has taken $2 billion worth of red tape out of the economy in the last 18 months. That has been a breath of fresh air to many different sectors across the economy. The savings from this measure are $28.6 million over four years from 2015-16. The employer contribution rate of 15.4 per cent remains unchanged. The PSSap is a fully funded accumulation fund and has been open since July 2005. Commonwealth employees covered by the accumulation arrangements have the choice of a superannuation fund, with the PSSap being the legislated default fund for employees engaged under the Public Service Act 1999. Very importantly, benefits in the PSSap are fully portable.

The Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme are unfunded defined benefit superannuation schemes. Around 40 per cent of members in these schemes are pensioners and have no relevant moneys in the relevant schemes from which administration fees could be deducted. Pension payments are paid from the Consolidated Revenue Fund. Because of the unfunded nature of these schemes, benefits in these schemes are generally not portable. I commend this bill to the House.

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