Harry Jenkins (Speaker) Share this | Link to this | Hansard source

I understand it is the wish of the House to debate this order of the day concurrently with the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. There being no objection, the chair will allow that course to be followed.

Debate resumed on the motion:

That this bill be now read a second time.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Twelve months ago, the now Prime Minister told the nation that the government had lost its way and pledged to get the government back on track and to deal with the range of challenges before it. As an election came and went, a new paradigm arose from the ashes of what Labor had left behind and we were erroneously led to believe that things may well be different. One of the areas of difference was about engagement—engagement-led policies. A number of weeks ago the opposition approached the government with respect to this range of bills to talk about engagement and how we would sit down with the government and have a discussion. To the minister's credit, we did go through a range of issues. Minister Snowdon was there and representatives of the finance minister were there, and we outlined some issues and sought some information back. We asked a range of questions. Two weeks have passed and what have we heard from the minister's office? Nothing. Where is the information we requested, which the minister promised we would be provided? Nowhere. Putting aside the fact that I cannot take the minister at his word, we sought to engage and have a responsible discussion in order to agree on a position in the interests of the nation, and this government could not even be bothered to get back in contact with the opposition for further discussion. If that is the game the government want to play, if that is their concept of a new paradigm, if that is their idea of engagement-led policy then there is no doubt they are facing a demise, as the front pages of the newspapers currently point out. That brings us to this bill, where the opposition has sought to engage and to negotiate in good faith, and the government has not even bothered to respond.

We are told these bills will merge the existing trustees for the Commonwealth civilian and military superannuation schemes into a single trustee body, the Commonwealth Superannuation Corpor­ation, or CSC. They will establish ComSuper as a statutory agency with a CEO and staff, and a function of ComSuper of course will be to provide administrative services to the CSC. The CEO will be appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence. The CSC will be trustee for existing Commonwealth superannuation funds, including the Commonwealth Superannuation Scheme, the CSS; the Public Sector Superannuation Scheme, the PSS; the Public Sector Superannuation Accumulation Plan; the Military Superannuation Benefits Scheme; the Defence Force Retirement and Death Benefits Scheme; and the Defence Force Retirement Benefits Scheme.

The CSC board will consist of 11 members—an interesting choice for the number of board members—appointed by the Minister for Finance and Deregulation. It is here that the full magnitude of what this government is proposing rears its ugly head. Of these 11 members of the board, five will be chosen in consultation between the finance and defence ministers. Three will be nominated by the President of the ACTU, the Australian Council of Trade Unions, and they cannot be sacked; only the President of the ACTU can remove them, thereby emasculating the minister. Two members will be nominated by the Chief of the Defence Force. And there will be one independent chair. But it gets better, because a quorum is nine. Name me a single board in this country that has a quorum of nine out of 11, where three of those members—which could knock out a quorum—are from the ACTU, and the minister does not appoint and cannot remove them. So three people can knock out a quorum of a board sitting over Commonwealth funds. These are three people not chosen by the minister—that is, not chosen by an elected official. These are three people who cannot be removed by the minister, an elected official. Suddenly we will have a huge bulk of Commonwealth funds effectively controlled by unelected officials, and that is a statement of fact.

The bills also establish the Defence Force Case Assessment Panel. The panel will review any decision referred to it by the CSC relating to military matters such as death and disability pensions. The panel has been included in this version of the legislation, as opposed to the legislation the government first introduced in the last parliament, in response to concerns raised by stakeholders in the veteran and ADF community. Taken at face value, we agree with the establishment of such a panel. However, we are concerned that the CSC is not bound by any recommendations of that panel. It in effect can make it a toothless tiger when it comes to representing the interests of military personnel.

These bills were first introduced in a slightly different form on 4 February 2010 and were passed by the House. The coalition opposed them on 2 June, and of course the bills lapsed with the proroguing of parliament. The previous bills were amended in the House to slightly improve the board appointment process following a Senate committee inquiry. The changes included requiring consultation with the Minister for Defence on employing board appointments and requiring that at least one CDF nominated director be present where a reduced quorum, in some circumstances, is permissible and when issues to be discussed related only to military superannuation matters. Whilst the coalition supported these minor amendments, we continued to oppose the bills because of the government's fanatical desire to have ACTU repres­entation.

When these bills were originally introduced—that is, in the last parliament—the Labor government had forgotten one thing. There was one tiny thing that they seemed to forget: to engage, to consult, to speak with the veteran and ex-service community, who would be impacted by it. That is not unusual in itself for this government. It revealed a complete ignorance as to what is important to the veteran and ex-service community. The Labor led Senate committee hearing into the bills largely whitewashed over the facts and the testimony given by key ex-service organisations, including the RSL and the Defence Force Welfare Association. Had the Labor government engaged with the veteran community, they would have quickly learnt that they would not tolerate the amalgamation of their super scheme with government civilian schemes if it meant that representation on the governing board was reduced or that the ACTU could effectively knock out a quorum of sittings. As it turned out, the veterans and ex-service organisations were right to question the legislation.

When these bills were introduced in the last parliament the Labor government did not just forget to talk to key stakeholders—namely, the veteran community; it forgot to engage with the coalition and has repeated the mistake once again. Last time, last year in eleventh-hour negotiations, when the Labor government realised it would be held accountable for its bad legislation, it finally decided to engage. This time it did not. And that is where the problem remains. The Labor government did not listen to concerns raised by the coalition or the ex-service organisations. They did not listen, but they caved in to the ACTU. I guess there is a requirement to pay back the tens of millions of dollars the trade union movement pumped into keeping this moribund Labor administration wobbly on at least one foot.

With regard to the current legislation before the House, it is like deja vu all over again: Labor not speaking to the coalition; one meeting held, in good faith, and no more; no questions answered; no engagement; information being requested; information promised, nothing coming up; no subsequent meetings. And the fundamental problems with the bill remain from the last iteration. Suffice to say we strongly oppose the bills, not least of all because the coalition cannot, will not, support the dominant position given to the ACTU over both Public Service and military superannuation funds. We cannot and we will not support the ACTU being able to block quorums. We cannot and we will not support the ACTU not being appointed, or not being removable, by the minister. Further, we will seek to introduce amendments to this bill, which have now been circulated. I hope that the Independents and the Greens will combine with us to knock out the bad parts of the bill by supporting these amendments.

The disproportionate representation of the ACTU on the board is backed up by this rabble of a government saying that the ACTU are the employee representatives and that therefore they should have a seat at the table. No-one argues with the longstanding tradition of employee representatives having a seat at the table. The minister should be able to appoint whomever he wants. If the minister wishes to appoint people from the ACTU, the minister should have the power to do that. No-one is saying the minister should be stopped from appointing whomever he wants. Indeed, the minister could appoint seven from the ACTU if the minister so chose—the minister should have the power to do that. But the sheer idea that, as a kickback, the legislation says to the ACTU: 'Here are three positions for you and you also hold the power to block quorums if you want to,' is completely and utterly outrageous. The minister must have the power to appoint whomever he or she wants to the board, whomever he or she deems fit to be the employee representatives. That is fair and that is just and the opposition has no problem with that at all. But we will continue to oppose the idea of saying: 'ACTU, I know you represent only 14 per cent of the private sector and 41 per cent of the public sector, but you alone will be the employee representative. Forget the other 59 per cent who decided that the union movement, especially the CPSU, is completely irrelevant to their lives and what they do. Forget that as a statement of fact—we will still give you three plum positions.'

There are eleven members on the board; the minister should be able to appoint all of them. The idea that the minister cannot remove someone from the board, with that being delegated to someone—in this case, the president of the ACTU—makes a mockery of the concept of elected officials, accountable at the ballot box for their decisions, being able to hire and fire people on Commonwealth boards. Simply put, this bill gives excessive power to the ACTU with regard to board appointments, termination of board members and quorum arrangements for board meetings. The minister and the minister alone should make the appointments and they should not be outsourced to their all-powerful backers, the ACTU.

The current legislation still contains provisions which make it unacceptable to the defence and veteran communities. Only 41 per cent of public servants are members of a union. Why should the 41 per cent of public servants who choose to join a union have 100 per cent of employee representation on the new board? How are the other 59 per cent of public servants, who are not members of a union, represented under the government model? In 2007, the Prime Minister said, 'I will be a Prime Minister for all Australians,' or was that the last Prime Minister? Surely that means the minister should appoint all the board members to represent all the constituents who are involved in the superannuation funds within ComSuper.

We have raised these concerns with the government, who are nevertheless pressing ahead with their current model. As was the case when this legislation was introduced in the last parliament, the Labor government has made it clear it is unwilling to engage on this legislation. The embedding of the unions in the legislation as a right seems to be an absolute and utter article of faith for this government. The government should come up with a governance model which is more representative of the diversity of backgrounds and perspectives of public sector employees. Indeed, the government should have engaged with the coalition—

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

You didn't want to.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

and come back with responses to questions so that we could have reached an agreed position, Minister. In summary, the major issue with this bill remains the ACTU representation on the board. We will oppose today, we will oppose tomorrow and we will oppose the next day the privileged treatment of the union movement that occurs every day with this government. We will oppose it. Board members should be appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence. The minister alone should appoint them. There should not be privileged positions for the Labor faithful and the Labor mates.

A second issue is that the ACTU is currently able to nominate more directors than is the Chief of the Defence Force. The defence and veteran community believes that military representation on the CSC board should be at least equal to that of the ACTU or, more importantly, there should just be no ACTU at all. Thirdly, the minister cannot dismiss an ACTU nominated director. It is outrageous that the government would put up a bill that says three members are from a privileged group and the government cannot get rid of them unless there is egregious behaviour—already extant legislation allows for dismissal in such a case—and only the President of the ACTU can get rid of them. Only an unelected official can get rid of them. It is unacceptable that the ACTU president, rather than the responsible minister, would have such power over appointments. The other five employer directors can be dismissed by the responsible minister but not the ACTU ones.

Given that a quorum of nine members is required for a board meeting and that three are ACTU directors—not appointed by the minister and not able to be removed by the minister—those three can prevent such a meeting from being held. That they can do so is simply and utterly outrageous. The bill cannot be supported in its current form. The opposition will oppose it. The opposition has circulated amendments in my name to make the bill far more acceptable to the veteran community and, indeed, to the Australian people.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It is with great sadness that I follow the member for Fadden in this important debate, because what he has visited upon all in this place is a litany of irrelevance and a demonstration of his absolute ignorance of the history of these schemes and how they operate. Let us go through, one by one, some of the gross misrepresentations and some of the examples of his absolute inability to comprehend or understand not only how public sector superannuation schemes have existed for over 50 years but how superannuation exists and is administered and how trustee arrangements operate. It is a great shame the member for Fadden is leaving the chamber at the moment, because he might actually learn something about the portfolio and about the issue that he proposes to expound upon.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

From you? Are you kidding me?

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

Yes, you might actually learn something about this. The first thing is that if he really wanted to engage on this issue he might have turned up in 2009 when it was first raised. I know that the then minister for finance, the former member for Melbourne, started extensive consultations with all the stakeholders in 2009.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

That is rubbish. No he did not.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I know this very well because I was one of the stakeholders involved in those consultations. I also engaged in discussions with members and representatives of the military schemes and others within the superannuation industry at that point.

But the member for Fadden turns up here a day late and a pound short in this debate and complains that for some reason he has not been listed to. Well, he has given us a very good reason today as to why he should not be listened to, and that is he has nothing to say of any relevance on the subject matter before the House. We heard him speak for almost 20 minutes on this important piece of legislation, but at no point did he grasp the fact that the whole reason this legislation is before the House is that it will bring a net benefit to those people he purports to represent, as a former serving member of the Australian Defence Force, in his shadow portfolio responsibilities in this place. This legislation will provide a net benefit to the members of the current military superannuation schemes. It will do that because they are currently members of a scheme which has around $3 billion in funds under management. In the modern world of superannuation, unless you have scale you are certainly not going to be involved in the deals and the advantages and get the sorts of investment returns that provide the benefits to members. That is the purpose of our superannuation scheme.

In the litany of 20 minutes of irrelevance from the member for Fadden we did not hear one word uttered about the benefits that this legislation is going to provide to the members of the civilian and current military schemes. The reason we never heard one word on it is that he simply does not understand it. He does not understand the whole purpose for which we have employee representation on superannuation schemes—public sector and private schemes at large. This is obvious when he complains about the fact that employee representatives on the fund cannot be sacked by their boss. If that is the proposition he seriously thinks is the way that superannuation funds should be managed in this country he should get up and say it. He should get up and say that he believes employers should have the right to appoint and sack the trustee representatives on superannuation funds, because that is what he is saying. He is saying that he takes some issue about the fact that under this legislation the boss of the employees cannot sack the employee trustees on this important superannuation vehicle, which has around $21 billion of employee funds under management.

He seems to labour under the misapprehension that the money under management in these funds is somehow government money. It certainly is not. The money has been contributed by the civilian and military members of these funds. So it is only fair and reasonable, and it has been a principle in this place and throughout this country since before industry superannuation was established, that the members of funds should have some say and some control, consistent with their fiduciary obligations and equity law, over the management of those funds. But the member for Fadden seems to think that it is unreasonable for members of funds to have some representative rights on the management boards of their funds. He thinks it should only be the employer who has the right to dictate who controls the funds. I am sure he is out of step. He would be a very brave man to put that as a serious proposition to any public sector employee or any employee in private enterprise. He is way out of touch. He simply does not know the subject matter on which he speaks.

He has no understanding of the history of employee representation on public sector funds. He would have served himself well and saved himself an enormous amount of embarrassment if he had taken the time to sit down with Senator Nick Minchin. If he had spent 15 minutes talking to him he would have understood that those parts of the legislation he objects to so strongly—that is, the provisions that allow the ACTU, in consultation with employee representatives within the public sector, to nominate to the minister representatives for these funds—are doing nothing more than reflecting the practice that was agreed with Senator Minchin when the public sector superannuation funds were radically overhauled by the former Howard government in 2004. In fact, this legislation codifies the agreement reached with Senator Minchin. So instead of coming in here, flapping his arms around and visiting upon us a litany of irrelevance and ignorance, he would have been better off spending a few minutes with the South Australian senator and asking, 'Nick, what is the history to all of this, mate? How have we got to this position?' The senator for South Australia, unlike the member for Fadden, does have a good understanding of the history of this fund and public superannuation and could have enlightened him. The member for Fadden would have been relieved of the historical embarrassment of having his words recorded for all time in Hansardabout how little he knows about public sector superannuation and about how little he knows about the benefits that are going to flow to the military personnel who have their money invested in military superannuation funds and in whose hands the future governance of that fund will be improved by this legislation.

Let us have a look at these funds and at what the legislation attempts to do. What the legislation attempts to do is bring under one roof the trustee arrangements for the superannuation schemes which are currently in place for both the civilian and the military superannuation arrangements. The first of these bills, the Governance of Australian Government Superannuation Schemes Bill 2011, will consolidate the trusteeship of the civilian and the military superannuation schemes. The effect of the bill will be to merge the Australian Reward Investment Alliance, otherwise known as ARIA, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority to form a consolidated trustee body. It does not consolidate the funds themselves but merely the trustee and governance arrangements.

CSC, as the Commonwealth Super­annuation Corporation will be known, will also assume responsibility for two closed civilian superannuation schemes from the Commissioner for Superannuation and the Defence Force Superannuation Productivity Benefits Scheme. CSC will be a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act and will be governed by a board. The CSC will be established by renaming the existing legal body known as ARIA and the bill will provide that CSC will have an 11-member governing board, which will comprise a chair, five member directors and five employer directors. The size of the board is a reflection of the diversity of the membership of the schemes. This is a point which has clearly been lost upon the member for Fadden, who seems not to understand that, when you bring two schemes together—one which involves funds under management of around $3 billion, the military scheme, and another which involves funds under management of around $18 billion—there are going to be concerns amongst the membership of both funds and the existing trustees of both funds. Those quite legitimate concerns have to be accommodated and dealt with, and they have been by this legislation.

Both military and civilian interests will have employee representation, with the Chief of the Defence Force responsible for nominating two member directors and the President of the ACTU nominating three member directors and the ministers for finance and defence nominating the five employer directors. It is important to note—and herein lies the complete lunacy and hypocrisy of the contribution by the member for Fadden in this debate—that he took great umbrage at the fact that the President of the ACTU, in consultation with employee representative bodies for public sector superannuation, will advise the minister on the appointment of the employee representation. Not one word of objection was raised about the fact that the head of the Defence Force will nominate equivalent employee representatives on the military side of the funds. You would have thought a man who is so concerned about equity, fair play and balance in representation might have said, 'Maybe there is a representative body in the case of the serving military men and women who have funds invested in the current military funds who might be an appropriate equivalent to the President of the ACTU to consult with.' But not a word was uttered on that particular issue, which just goes to show that he does not understand the subject matter that he gets up to talk about this place.

What goes as debate is nothing more than bigotry and blindness about the fact that in this country, unlike many others around the world, we have a system which enables employees to have some control over their retirement savings. They have some control over the fact that, when they are investing hundreds of thousands of dollars in many instances in their retirement savings, they are entitled to have some representative people with expertise who have a say in how those funds are managed and the governance of those funds.

I would like to take this opportunity to pay tribute to one of those employee representatives. Margaret Gillespie has recently retired as an employee trustee of the ARIA fund—the body governing a number of the public sector funds. I worked closely with Margaret Gillespie when she was an Assistant National Secretary of the CPSU and I was the National Secretary. It is not well known that public servants who are members of the PSSap and other accumulation schemes now regularly receive an employer contribution of 15.4 per cent into their superannuation funds. They owe enormous gratitude to Margaret Gillespie for the intensive work that she undertook in negotiating with the former minister for finance, Senator Nick Minchin. As I have mentioned before, in 2004 the former Howard government closed the PSS and CSS schemes and moved all new employees off a defined benefit scheme. It is largely due to the enormous advocacy work of Margaret Gillespie and, I have to say, the fact that Senator Minchin did actually understand his brief and did get the importance of public sector superannuation—unlike many of those who have spoken in this debate on the other side of the chamber, he actually understood what he was talking about and was able to reach agreement with the employee representations—that public servants curr­ently enjoy an employer contribution of 15.4 per cent to their superannuation funds. It is equivalent to what we receive in this place. So I take this opportunity to pay enormous tribute to the work of Margaret Gillespie. She resigned from her position a few weeks ago as the trustee of the fund. She is one of literally hundreds of working men and women who give up their time and effort to represent employee interests in funds, and we ought to pay tribute to them. (Time expired)

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise today to speak on the Governance of Australian Government Superannuation Schemes Bill 2011, the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. Just over a year ago we stood in this chamber debating this very bill. This bill lapsed because the then Minister for Finance and Deregulation, Lindsay Tanner, failed to consult adequately with stakeholders and the crossbenchers in the Senate and refused to take onboard the advice that was provided by the veteran community. It is true that this bill will take various organisations—one of those being the Australian Reward Investment Alliance, ARIA, who have the investment management rights over the CSS, PSS and PSSap—and bring them together with the board which oversees the MSBS as well as parts of the DFRDB and DFRB.

The Public Service superannuation fund this time last year amounted to some $16 billion. The money held on MSBS amounted to some $3 billion. As I stated when this bill was being debated last year, in principle the coalition has no problem with that money being joined together for investment to provide greater returns to each member, whether they be public servants or retired military personnel. The coalition sticking point all along has been this Labor government's desire, in essence, to hand over control of these funds de facto to the ACTU.

A board will be formed that will have five employer directors chosen in consultation between finance and defence ministers. It will have three members nominated by the President of the ACTU. It will have only two members nominated by the Chief of the Defence Force and it will have one independent chair. Already Defence is behind the eight ball, because there are three sectors of service in the Defence Force. There is the Air Force, there is the Navy and there is the Army. But the issue with this bill that concerns the coalition most of all is not just the imbalance in the structure of the board; it is the fact that the minister cannot dismiss an ACTU-nominated director. The President of the ACTU has more power in control of these funds than the minister, who ultimately is accountable to this parliament for the administration of the funds. This is outlined in the explanatory memorandum, which says:

The CEO is not subject to ministerial direction in the performance of this statutory function.

Given the make-up of the board, the CEO is de facto responsible to the President of the ACTU. That is an area that we have concerns with.

I cannot recollect any board of 11 where you need a quorum of nine. As my colleague the member for Fadden so rightly pointed out, this would mean that the ACTU could spoil the quorum and delay the progress of any investment decisions if it does not go their way.

The thing that concerns me most of all is the unintended consequences of this. In the last parliament I was the shadow minister responsible for this—and I congratulate the member for Fadden for the work that he has been doing on behalf of our defence members. One of the briefings said that this $16 billion and $3 billion will be combined to create a $19 billion fund which will then be put out to tender. It will not be the board of directors working out where the investment goes. It will go to tender. I suspect that sitting in the back of the mind of the President of the ACTU and all the ACTU members is the idea that this fund would be well placed with an ACTU-driven superannuation investment arm. That is why the sticking point is with this government. They want to make sure that they have absolute control over all these funds so that they can put all these funds to a union-driven superannuation management fund and therefore prop up the union movement even further.

Mr Perrett interjecting—

This will be payback. The member opposite says to name the ones that will exist. The member is nothing but a fool if he does not understand that within a moment's notice the ACTU could pop up an arm and establish such a body.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Paterson tested my patience yesterday and I do not think he should try to test it again today.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Madam Deputy Speaker, I suggest you ask the member not to intervene.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Paterson knows he should not respond to interjections. I have not thrown anyone out in a while. It could be my day.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Madam Deputy Speaker, that is entirely your prerogative.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

It is.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

There are flaws in this bill and the current minister is repeating the errors of the previous finance minister. He is failing to consult. He is failing to negotiate and find a pathway forward. It is true that after 1 July the balance of power in the Senate will shift. The Greens will have power. I would think the Greens, who on a number of occasions have stood up for the financial rights of members of our military, will stand up to this minister and say, 'No, the ACTU president should not have more power than the minister for finance.' As I said, and as is outlined in the explanatory memorandum, the CEO is not subject to ministerial direction in the performance of his statutory functions but in essence will be there to serve the needs of the President of the ACTU, given the balance of the power and the make-up of the board and given the fact that only the President of the ACTU can dismiss members. The member for Fadden has moved amendments that move the balance of power of the ACTU in this board—

Government members interjecting—

Members opposite interject and say, 'They're only trustees,' but trustees set direction; otherwise, there would not be much point in having trustees. Indeed, there would not be much point in having a board if it was not establishing the policy matrix by which the administration of the funds occurs.

I also refer to the contribution of the previous speaker, the member for Throsby, who for the better part of seven minutes did nothing but waffle on about tones of speech as though he were some great oracle in relation to this industry. I am sad to inform the member for Throsby that he is a long way from being such an oracle. In the tone of his discussion he displayed a relative lack of understanding of the needs of the security of the financial investments of members of our Australian Defence Force. I, like the member for Fadden and other members in the coalition, have taken time to speak to organisations like DFWA and, more importantly, individual members of the Defence Force, retired and serving. Their greatest concern is that this government will again, like it has in the past, destroy the superannuation benefits of those, both serving and retired, in our military system. So there are great concerns.

The government has failed to explain, through a failure to sit down and discuss, why when the union movement represents only 41 per cent of the Public Service it should have the majority control. Defence has 100 per cent of its members represented by only the two nominated directors; the ACTU will have three nominated directors for 41 per cent of its contributors. I would have thought that would have said something: if 59 per cent of the people choose not to be in the union movement then perhaps it might be wiser to have more independently nominated directors put forward by the minister and the Chief of the Defence Force. After all, whilst the Chief of the Defence Force and others are in the military, they are also public servants.

I cannot support this bill, and I cannot support it for the exact reasons I outlined on 2 July in this House, not only in my main speech but also during consideration in detail. Again, this minister, like the previous minister, has failed to adequately consult. Through maintaining their position on the bill, they have not secured the confidence of the Defence personnel whose funds they seek to represent, because those people are concerned that the government will be putting the ACTU in with an absolute, uncontrollable balance of power to administer their funds. Given the government's previous track record going back to the Whitlam era, I can understand their fears. So I will not be supporting this bill.

Even though the government may use its numbers to push the bill through, I would have thought some of the Independents in here would have sat down and thought wisely of the ramifications of the bill in its current form and made the minister stand to account. Then again, perhaps they are more interested in their carbon tax or their poker machines levy. Perhaps they give greater precedence to those things than to the welfare of former and current serving members of the military of this country.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

The government is doing the right thing by its current serving Defence Force men and women by improving superannuation benefits for the majority of those in uniform. The contributions from those opposite on the superannuation bills have been absolutely amazing. They do not dispute that they are going to be better off financially because of the changes. The big thing they are opposed to is employees' representatives—unions—being given a voice on these superannuation funds. Guys, you picked the wrong area in which to be disputing unions' contributions to a policy issue if you are picking on the unions' contribution on superannuation.

The union movement has an impeccable record on superannuation, and it is worth going back and recapping where we would be in Australia without the unions and their push to make sure we have superannuation for all Australians. In Australia we have had superannuation in some form for a little over a century, but for most of that period it has not been universal. Labor has a proud record of reforming and developing superannuation to make it universally available. In 1974 the Australian Bureau of Statistics conducted the first survey of superannuation, and it came up with a pretty sorry sight. Only 32 per cent of the workforce was covered by superannuation, and only 15 per cent of females who worked were covered by superannuation. In the private sector it was even lower: only 24 per cent of people in the private sector had super cover under the conservative government that was in at the time.

The first major breakthrough was not until 1985. That breakthrough came because the union movement made an important contribution to superannuation in this country by working hand in hand with the Hawke Labor government. In 1985 the ACTU sought a three per cent employer superannuation contribution, to be paid into an industry fund as part of the national wage case with the Australian Conciliation and Arbitration Commission. And guess what? Those opposite opposed it then, and they have opposed it ever since. They resent the fact that working people should be provided for in their retirement through universal superannuation. So today's opposition to these bills comes as no surprise.

Before the union movement mounted its campaign and reached an agreement with a Labor government, access to superannuation was deeply inequitable. Before the unions' national wage claim in 1985, only a minority of workers had superannuation, and these were mainly higher earning white-collar workers, public servants and those in the Defence Forces. In recognition of the need to develop strategies to manage an ageing population, the Labor government supported the ACTU's claim, and in February 1986 the commission confirmed that awards would include contributions of up to three per cent to approve superannuation funds. Between 1986 and 1990—a period of Labor government—the number of employees covered by superannuation funds rapidly increased from around 40 per cent of employees to 79 per cent of employees as a result of the commission's ruling. On this side of the parliament we have taken the view that superannuation is needed. Those on the other side have continually attacked and tried to draw it back. On coming to government their contribution was to try and break the industry schemes through choice in superannuation. Of course, what actually happened was that the industry super funds increased the percentage of people participating because they are well-run funds with union representation on their boards and they deliver better returns than most of the retail funds. That is why they have been so successful and that is why the opposition from those opposite is purely ideological. It is in the DNA of those opposite to hate unions. It does not matter what the issue is, they try and bring it up.

Mr Robert interjecting—

The member opposite says, 'Despise unions.' That is a great contribution that he has made, and it is entirely consistent from the party of Work Choices, who tried to rip away working peoples' conditions, in that they would oppose working people—be they in the military, the public service or generally—from having access to adequate retirement funds through access to superannuation. This party opposite want to take away rights from working people in all aspects. That is why they supported Work Choices. It is no surprise that we see, less than two months after coming into office in New South Wales, attacks on public sector workers by the O'Farrell government. The attacks are almost worse than Work Choices in that they are taking away the rights to have representation before an industrial relations commission, which has existed in the state of New South Wales for over 100 years and which was supported previously in a bipartisan manner.

From those opposite we have an instinctive hatred of working people who want to have their conditions preserved by an independent umpire, but most of all what they dislike is unions. It does not matter what the issue is, if there is an opportunity for them to come along and say that the big bad unions are going to be the downfall of something, they will try and do it. Of course, it does not stack up in reality and it certainly does not stack up with superannuation. In terms of superannuation, as I have already outlined, without the wage claim in 1985 we would not have universal superannuation in this country. It was because of the union movement and then because of the Hawke Labor government that we saw a universal superannuation being extended to most workers in this country. We should remind ourselves what the figures were when the coalition was in government. There was only 32 per cent of the workforce with superannuation and only 15 per cent of females.

Those on this side have a proud history in relation to superannuation, a proud history in making sure that superannuation is accessible for ordinary people, and a proud history of making sure that superannuation is run in a professional manner—a manner that gets the best returns for those people who are part of superannuation funds. That is why people on this side of the House have no problem in saying that industry super funds have been an overwhelming success. If those opposite actually went out and spoke to the financial markets or went overseas they would understand that our industry super funds are the envy of the world. The OECD recommends that governments, when they have the resources available, should look at Australia's universal superannuation system. It is something that is admired around the world.

What do we have from those opposite? We have pot shots about who sits on the boards. It is demeaning of those opposite, but it is also insulting to those many union officials who have sat and worked for the best interests of their union members on the superannuation boards to make sure that our superannuation funds in Australia, our industry superannuation funds that have union representations, give the best returns of any superannuation funds in this country. I think that the members opposite owe a big apology to those people who have contributed so much over many years now to make sure that our funds are the envy of the world.

There are three bills specifically in relation to the debate here today. One of those three bills is the Governance of Australian Government Superannuation Schemes Bill 2011. This bill gives effect to the government's announcement in October 2008 to merge the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority to a consolidated trustee body. The new consolidated trustee body, to be known as the Commonwealth Super­annuation Corporation, will be responsible for managing the main Commonwealth civilian and military superannuation schemes. It will also assume responsibility for two closed civilian superannuation schemes from the Commissioner for Superannuation and for the Defence Force (Superannuation) (Productivity Benefit) Determination. The merger will bring more than 680,000 members and pensioners and over $21 billion in funds under management of the CSC. Again, what we find from those opposite is that the only objection to this bill is who is going to sit on the board.

The second bill is the ComSuper Bill 2011. This bill gives effect to the government's decision in November 2009 to modernise the governance structure for the administration of the Australian government superannuation and to clarify the functions of ComSuper. The statutory office of the Commissioner for Superannuation will be replaced with a CEO of ComSuper to be appointed by the Minister for Finance and Deregulation. The CEO will be responsible for providing administration services to the CSC. Replacing the role of the Commissioner for Superannuation with a CEO and transferring the commissioner's current trustee responsibilities for some old, closed civilian schemes to CSC will allow the CEO and ComSuper to focus on the delivery of administration services. Under the bill ComSuper will be established as a statutory agency for the purposes of the Public Service Act 1999 comprising the CEO and staff of ComSuper.

The last bill in the package, the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011, supports the reforms including the governance and the ComSuper bills. The bill does this by making consequential amendments to a range of Commonwealth legislation to take into account the changes to the governance of Australian government superannuation. It also puts into place transitional arrangements for the reforms. The bill transfers responsibility for the management of the scheme under the Superannuation Act 1922 and the Papua New Guinea Scheme from the Commissioner for Superannuation to the CSC. The bill also facilitates public sector employees being able to consolidate their superannuation savings under the management of the CSC, should the government decide to implement such a reform in the future.

Overall, the package of the three bills implements reforms required to maintain strong, contemporary governance arrangements for Commonwealth superannuation schemes that will allow substantial benefits to flow to members while retaining the individual scheme benefits and entitlements. The package protects those features of military superannuation that recognise that military service is unique and different to civilian employment. So these bills are targeted bills that go to making sure we have better administrative arrangements that have a real effect on the payouts and entitlements of civilian, public service and military personnel.

The package of bills will increase superannuation returns for the majority of our serving members. Specifically, it will increase the take-home superannuation of over 90 per cent of our current serving personnel. It will also benefit all future members of the Defence Force. By way of example, a 0.5 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 superannuation benefit of $95,000 over the full career.

So we have here legislation that is modern and provides up-to-date administrative arrangements and tangible benefits in terms of superannuation outcomes, but all we have from those opposite is their fear and the bogey associated with the scare campaign that they want to run on union interests—legitimate ones—not being excluded from these superannuation boards as trustees. Again we see the complete bias of those opposite who cannot help themselves and attack the unions and also the government in this case for legislation that is about improving outcomes for military people, civilians and public servants and about improving their arrangements. The whole basis of their opposition is about trying to silence the voices of the elected trade union representatives of the workers who work in those industries. If this were the first time that this had ever happened you might say, 'Well, let's have a look and see how it works,' but we have industry superfunds and we have union representatives who are nominated by the ACTU on these funds. We have had industry funds operating since 1986. They have been universally acknowledged as being great vehicles for people's retirements and have been tremendously successfully. To try and run a campaign opposing these bills shows how shallow those opposite are and shows how they really do not have at heart the interests of any workers, whether they be public servants, the military or the general public. These important bills should be passed, and I commend them to the House.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

The Governance of Australian Government Superannuation Schemes Bill 2011 is not a modern bill. Sadly, it is a bill of the past, a bill which seeks to entrench the ACTU in a position of influence which is not necessary. Our opposition is not anti union. As a matter of fact, I have met with unions recently to discuss the carbon tax and the impact that it is going to have on the industries in my electorate of Wannon. What we have seen from Paul Howes and others is that there is great concern on this issue. We on this side are happy to work with unions to raise issues where jobs are at stake but this bill is entrenching the power of the ACTU and it is going back to the days of the old accord. As we know, the old accord did not deliver ultimately for the Australian economy and we do not want to see the ACTU in a position of power here especially when it does not represent more than half the public servants who would be caught up by this bill.

I would like to talk on this bill and then talk about the Public Service. I was employed as a public servant in the Department of Foreign Affairs and Trade for a number of years. I was not a member of a union and I must say I would have found it an affront to find that, having paid money into superannuation, the government would be demanding that the ACTU have this dominant role over the money which I had worked for and which I was putting into superannuation. I would then like to specifically detail some of the problems with this bill.

There is a simple way forward which the government should acknowledge and should agree to, and that is to allow a greater role for the minister in appointing people rather than having a greater role for the Secretary of the ACTU, Jeff Lawrence. As a matter of fact, it seems ridiculous that we would even be having this discussion on the role that the leader of the ACTU should have in appointing people to these positions and on the fact that we are taking power away from the elected minister to even be able to replace ACTU appointees.

This bill and the cognate ones establish ComSuper as a statutory agency consisting of a CEO and staff. The bills merge the existing trustees for the Commonwealth civilian and military superannuation schemes into a single trustee body, the Commonwealth Superannuation Corp­oration. The function of ComSuper is to provide administrative services to the Commonwealth Superannuation Corp­oration. The CEO of ComSuper is appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence. The Commonwealth Super­annuation Corporation will be trustee for existing Commonwealth superannuation funds including the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Public Sector Superannuation Accumulation Plan, the Military Superannuation and Benefits Scheme, the Defence Forces Retirement and Death Benefit Scheme and the Defence Forces Retirement Benefits Scheme. The CSC board would consist of 11 members appointed by the Minister for Finance and Deregulation: five employer directors chosen in consultation between the finance and defence ministers, three members nominated by the President of the ACTU, two members nominated by the Chief of the Defence Force—so the ACTU has more representation regarding these military schemes than the Chief of the Defence Force—and one independent chair.

The bills also establish the Defence Force Case Assessment Panel. The panel will review any decision referred to it by the CSC relating to military matters, such as death and disability pensions. The panel has been included in this version of the legislation in response to concerns raised by stakeholders in the veteran and ADF communities. The coalition agree with the establishment of such a panel; however, we are concerned that the CSC is not bound by the recommendations made by the panel. The overall legislation remains, as I have previously said, unacceptable.

These bills have a history. They were first introduced on 4 February 2010, when the coalition also raised its concerns about them. We have been very consistent on this matter. There were some slight improvements made to the bills but they have not gone far enough. The coalition continues to oppose these bills, as the ACTU has a disproportionate representation on the board and is the exclusive representative on the board of public sector employees.

At this stage I state that I have an interest in this bill because I was a member of the Public Service and I paid superannuation into a fund. That money is still in that superannuation fund, so it is with direct relevance that I speak on this. As a member of the Public Service I also know full well that the majority of the Public Service are a non-unionised workforce. Around 40 per cent of most departments are members of a union and roughly 60 per cent are not. Therefore, it does seem incredibly strange that the ACTU would be given such a privileged position. I would like to hear from members on the other side exactly why they have given the ACTU such a privileged position.

It seems especially strange that the Chief of the Defence Force and those from, for instance, staff representative bodies—who do an equally good job representing those members employed within the Public Service—are not given such a privileged position and are not considered part of this. The bill should contain no special provisions for ACTU representation on the board. Board members should be appointed by the Minister for Finance and Deregulation in consultation with the Minister for Defence. I cannot see what would be wrong with that. Why couldn't we have the minister, if she wanted to, appoint someone from the ACTU or someone from the union? No-one would have a concern with this as long as the person had the relevant expertise and there was proper balance in the decision as to who the three appointees would be. But this says to the President of the ACTU, 'You have carte blanche on the three appointees.' Not only that but if they are to be removed the minister has to go to the President of the ACTU and say, 'Please, can you remove them?'

I am not quite sure how members from the other side got into this place but I thought we were the people who were elected to represent Australia and our constituencies. I do not recall seeing the President of the ACTU facing the Australian people. We ultimately are the ones who must go back to the Australian people, stand before them and say, 'These are the reasons we have made these decisions and we are coming back to you to seek to represent you.' The President of the ACTU does not do that. Why then should we make an elected member of parliament, who has become a minister, go cap in hand to the President of the ACTU to seek to have board members removed? As someone who has been a member of the Public Service and who has money in one of these superannuation schemes, I find it absolutely ludicrous that this would be the situation.

It brings with it other issues. For instance, the three ACTU members can prevent a quorum. If they do not want a meeting to take place, they can use their numbers to make sure that there is not a quorum. It is a fact. This is the dominant position which has been given to them. I will spell it out for those opposite: given that a quorum of nine members is needed for a board meeting, the three ACTU directors can prevent a meeting being held. This newfangled accord that we are putting in place to look after superannuation for the military and the Public Service means that the three positions which have been given to the ACTU can be used to stop a meeting being held.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

Why would they do that?

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

Who knows? Who would know why? But why would a government allow that to happen? We know that the Greens are running the agenda at the moment, but not only will this lead to the Greens running the agenda; it also looks like the ACTU will be fully back in influence as well. What will that mean for the grassroots union members—those who are worried about their jobs, worried about the impact of the carbon tax? Once again, they will be shut out. Their voices will not be heard and that is a real worry.

As I have said before, having these three ACTU members on the board means that defence and veteran representation on the board is less than it should be. Currently the ACTU is able to nominate more directors than the Chief of the Defence Force. The defence and veteran community believes that military representation on the CSC board should be at least equal to that of the ACTU or, alternatively, that the military should continue to have its own independent board. I think that is fair. Given what our defence personnel do so magnificently in defending Australia, the fact that we will not allow them to have as much control or more over their hard-earned superannuation as the ACTU is an indictment of this government.

In summary, I have three serious concerns with this governance bill. The special provisions for ACTU representation on the board should be changed. The provisions for defence and veteran representation on the board should be changed so that that community has greater representation. The minister should be allowed to dismiss an ACTU nominated director. He should not have to go begging, cap in hand, to the head of the ACTU saying, 'Please, we think there is a problem with this nominated director so could you remove him?' The minister elected to this parliament having to go cap in hand to Jeff Lawrence to get someone removed is an absolute indictment of this bill. The last thing which needs to be changed is that the ACTU should not be in a position, because their numbers allow them to decide whether or not there will be a quorum, to decide whether a meeting goes ahead or not. Whoever drafted this bill should have taken that into consideration as well.

As someone who worked in the Public Service, as someone who provided money into a superannuation scheme, and it is still there, I find particularly worrying the direction in which the government is headed in putting together the board which will ultimately have the say over where all the money of our defence personnel and our public servants will be invested and how it will be managed. The fact that the ACTU is given such a prominent position on this board, especially ahead of the minister and people elected to this parliament, is of major concern.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I begin by saying to the member for Wannon that he can rest assured that superannuation in this country is in very good hands, not only through the legislative changes we are bringing about through these three superannuation bills but also through the long-term commitment that the Labor Party, the labour movement and the ACTU have made to guaranteeing that ordinary working people in this country have access to superannuation for their retirement. I hear him talking about all his concerns and asking why the ACTU and everyone else should have a say, but in reality this is about ensuring the longevity and the absolute availability of superannuation in this country over a long period and maintaining full credibility for the superannuation system and the superannuation guarantee.

We have before us three excellent bills—the Governance of Australian Government Superannuation Schemes Bill 2011, the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. In summary, this package of bills is about good reform and about good governance arrangements in particular in relation to how these bills and schemes work in line with trends in the broader superannuation industry. No-one could criticise this government for not having done enough. We have done what is necessary to ensure the proper operation of superannuation, the superannuation guarantee and the superannuation industry in its broad application to the community. We have gone to great lengths to ensure not only that over the past 20 years with proper governance superannuation has survived, grown, become the basis of Australia's national savings and played an enormous role in getting this country through the global financial crisis but also that for the next 40 or 50 years, with changes and trends in the community, the proper governance mechanisms will be in place in line with what people expect.

The Governance of Australian Government Superannuation Schemes Bill implements directly the government's decision to establish a consolidated trustee—a very important part of getting the legislation right and making sure superannuation is right for the Australian government civilian and military superannuation schemes. The consolidated trustee body will be known as the Commonwealth Superannuation Corporation, the CSC, and it will be a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997. It is not at all like the member for Wannon and other members across the chamber were saying. If you listened to them, you would think that somehow we had just handed it over to people on the street and said, 'You manage according to your whim; do whatever you like with it'. In fact, the industry is highly regulated and has a great track record of good governance. These bills improve on that superb history. This governance bill will protect the unique nature of military service by, among other things, requiring the governing board of the CSC to have regard to what is unique about military service, as provided for in the relevant military superannuation acts. So, we are linking the two legislative areas together to make sure that we get it right. The bill also provides that the CSC is to be governed by a board. I do not think many people would argue with that. It is to be governed by a board based on a common model in the broader superannuation industry. It is a successful model which has delivered for ordinary people over many years. The ACTU and the Chief of the Defence Force will nominate three and two directors respectively. They will do that for a very simple reason: proportionally, the funds they represent are of quite substantially different sizes. The civilian fund is some $19 billion and the military fund is $4 billion, which is significantly less and the representation on the board reflects that. We have ensured that the representation not only is proportionate but also carries certain responsibilities about forming quorums and making sure that everybody has a say at the table.

In listening to the opposition in this debate, I heard the question, 'Why would you even have the ACTU at the table?' It is as though we somehow ought to carve away the body that represents workers in this country who were the people who created the superannuation guarantee, along with a really good Labor government which saw the need to get this right in the future. Why in the world would the other side continue to argue that these representatives either should not have any representation at all or they should have a diminished representation? I will leave it for people to decide for themselves why the opposition would go down that path.

It is quite simple. In my book, I say, 'Let's ask the working people who they would trust with their superannuation.' I think the numbers speak for themselves. If you have a look at where workers have their money linked to the market and growing properly, the safest places are in a whole range of very good industry funds. I think workers speak with their feet when it comes to where their superannuation goes.

If you listen to the other side you would think that somehow through the introduction of these good governance bills, these reforms and these improvements that it was the end of super—this is the message I am getting from the opposition. Somehow, this is the end. From this day forward, after we pass the bills, super will finish. Again, it is quite the opposite and I think it is very disingenuous of the opposition to speak in such a way about superannuation, the superannuation guarantee and particularly the civilian and military funds that we are talking about.

The Minister for Finance and Deregulation will choose the five employer directors as well. So you will get the employer directors, the military representatives and, through the ACTU, the workers' representatives. You will get a balance of what should be there, what has worked very well historically and what will continue to work even better in the future.

The ComSuper Bill 2011 implements a number of other government decisions to modernise and clarify the administrative arrangements of the schemes. It does this by establishing ComSuper as a statutory agency under the Public Service Act 1999. It will replace the Commissioner for Superannuation with a chief executive officer, which will give proper carriage to the way it is administered. The Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011 amends a range of Commonwealth legislation to take into account the new trustee arrangements. It also makes particular changes to the governance of administrative arrangements and will include transitional arrangements to make sure these changes go ahead seamlessly.

These reforms will do a number of things, but through consolidating funds under management and reducing administrative costs they will provide a net monetary benefit for the people these funds are held for. It will mean an improvement in the superannuation returns to members, particularly for Defence Force personnel. This is an improvement because it gives them more money in their retirement. This is something that should be supported by the opposition. This is a good set of bills and measures. No-one can argue that increased economies of scale do not deliver better outcomes, and when it comes to superannuation schemes nothing can be truer than that fact.

The fact that we have consolidated both the civilian and the military funds under a single board means that the economies of scale will provide a greater advantage. I can even tell you how much of a greater advantage that will be. By way of example, if it was just a 0.5 per cent increase in the net investment return for a member of the RAAF who had joined as an officer cadet and rose through the ranks to become a group captain at retirement it would lead to an increase in superannuation benefits of $95,000 over that person's career. That is a substantial amount that I know would be welcomed by that particular serving Defence Force member. Even if it were just over 10 years of service it would mean an increase of $41,000. I do not think anyone can argue against the net benefits of the economies of scale. These bills not only go directly to good governance measures, to modernising and improving the methods by which funds operate but also will have a net tangible, visible impact on the membership by giving them more money in retirement. That should always be a focus—to increase efficiencies and get it right.

This government has not been slow not only in the area of reform but also in ensuring that members of superannuation funds get good, long-term returns. We can see that through the extensive work that has been done in this area by Jeremy Cooper in his review and through the reforms that have been carried out by the Assistant Treasurer, Mr Shorten, who is here at the table now. I know he is a great supporter and believer in the superannuation guarantee and in superannuation as a way to improve people's lives in retirement. Given that we have an ageing population, there is a greater need for people to fund their own retirement so that they can enjoy a better standard of living in retirement.

As I said, the significant benefits of this trustee consolidation will be delivered through the economies of scale. It will lower the investment costs and will potentially deliver much higher investment returns. Members of the Military Superannuation and Benefits Scheme—the MSBS—will benefit the most. Out of everyone who benefits here, they will benefit the most because of the smaller size of their fund. As I said earlier, the civilian fund is $19 billion and the military fund is $4 billion. Without the consolidation, members of the MSBS, which is comprised of about 93 per cent of all serving Defence Force personnel in this country as well as future personnel, would be disadvantaged compared to other public servants, other funds and the broader community. I do not think that is acceptable. Given that all of us in this place recognise the unique contribution that Defence Force personnel make, the sacrifices they make and the way they represent this country, we ought to continually be looking at ways to improve their lot, whether it is their Defence Force conditions or their superannuation and what they get in retirement. This legislation goes a long way towards doing just that. It will improve their investment value, it will reduce their fees and costs, and in the end it will be a really good outcome.

Without this change, the MSB board is unlikely to attract and retain quality board members and experienced and skilled staff due to its relatively small size. In the future, we will see funds consolidate and become larger. Economies of scale are extremely important in achieving stability and longevity, and safety for the superannuation funds. Small funds are not necessarily better; larger funds necessarily can be. There is a whole range of really good quality boards that have good quality people. If this does not get the support of this parliament then we would severely limit the capacity of smaller funds, particularly the military fund, to deliver the maximum it can for its members. I think that would be a tragic outcome. This legislation will have a measurably good impact in terms of the investment value at the end a person's career or even if the benefit is over a serving period of just 10 years.

A number of concerns have been raised about how you get to these positions and how you bring this about. The answer is quite easy. It is consultation. You talk to the military, Defence Force personnel, superannuants in this area, the public sector and the directors who are employees, and you come up with these benefits. That is exactly what this government have done and we have done it in a range of ways. We have also acknowledged the unique nature of military service. We have made sure that it is credible, legitimate and in consultation with all stakeholders.

Board composition has been an issue for the other side of the House. I am a little puzzled as to why they would focus on one narrow piece. When there is a range of good legislation and reform and you pick out just one little bit, and you twist that little bit to make it sound like it does something completely different from the intent of the legislation and the reform, then the focus of that argument ends up being far from the truth and far from reality. In this legislation, board composition provides that at least one chief of the Defence Force nominated as a director be present whenever the board considers any issues relating to the military schemes. That is a good thing because there ought to be a capacity for someone representing military personnel to be in the room at the table if a decision is to be made.

The establishment of the Defence Force Case Assessment Panel will be mandatory and the legislation prescribes its membership. It is not membership that is out of hand and created on a whim; it is actually legislated. It goes beyond this parliament and beyond this government. It has been done the right way. Previously the legislation gave the CSC discretion to establish this panel to review decisions which currently are the responsibility of the DFRDB Authority. This is good reform and we have done the right thing, and it goes the right way. I commend these bills to the House because I think they are positive. They are about saving money and about increasing the standard of living for people in their retirement. (Time expired)

Ken Wyatt (Hasluck, Liberal Party) Share this | Link to this | Hansard source

I rise to oppose the package of three bills put forward by the government—the ComSuper Bill 2011, the Governance of Australian Government Superannuation Schemes Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. The package gives effect to government decisions in 2008 and 2009 in their attempt to modernise Australian government superannuation and their desire to establish equitable governance arrangements in line with the broader superannuation industry. If we use the logic of the member for Oxley's argument in saying that the board comprises employer interests, the interests of the military and employee representation, the question in my mind is what happens to those employees who are not part of the ACTU movement and therefore are outside of that agreement? Their voice is not heard. In a sense, this House has an obligation to all of those people we represent in our electorates to ensure the best possible deal prevails equally for all and that the governance arrangements reflect that.

At the core of the change to the legislation is the move by the government to amalgamate all civilian public sector and military superannuation funds into one package. I listened with interest about the efficiency gains and the net benefits, but I have questions about the way that will truly provide benefits in the long term to those interests that have prevailed within the different superannuation funds.

I want to emphasise the number of superannuation funds that will be centralised. The Gillard government seem to be keen on centralisation. This bill would see the merger of the Australian Reward Investment Alliance, the Public Sector Superannuation Scheme, the Public Sector Superannuation Accumulation Plan, the Commonwealth Superannuation Scheme, the Military Superannuation and Benefits Board, the Defence Force Retirement and Death Benefits Authority and the Defence Force (Superannuation) (Productivity Benefit) Scheme to form a single trustee body called the Commonwealth Superannuation Corporation.

The legislation will realise the establishment of ComSuper as a statutory agency to provide administration services to the Commonwealth Superannuation Corporation. The coalition is inherently opposed to this move, although I need to acknowledge some of the amendments made by the government are beneficial. To me, it is obvious that the amendments are an attempt to make the legislation more acceptable to the defence community.

The bills above were introduced in a slightly different format in June of last year, but lapsed in September 2010. Since then, the Gillard Labor government have worked with haste to insert additional arrangements to ensure the proposed legislation is more likely to pass through both houses. In terms of the reference to consultation, sometimes the degree of consultation with stakeholders on some of the complex pieces of legislation that pass through this House is not as thorough or as comprehensive as it should be. Sometimes it is easier to consult with very limited fields of stakeholder interests. The major concerns of the coalition are the amalgamation of defence superannuation into the civilian superannuation sector and the level of influence the Australian Council of Trade Unions will have on the Commonwealth Superannuation Corporation board. The bill merges the trustees into a single entity under the Commonwealth Superannuation Corporation. The corporation's board will consist of 11 members, as my colleague on this side of the House outlined previously, appointed by the Minister for Finance and Deregulation. This is where the major problem arises, and the Labor government is using this bill as a Trojan Horse to raise the levels of undue influence of the ACTU over the pensions of hundreds of thousands of Australian workers. I would also bet London to a brick that a substantial number of members of the various funds that are being amalgamated are not members of unions, and therefore their interests would not be canvassed under the ACTU membership coverage.

If this bill is passed the board members will be appointed by the Minister for Finance and Deregulation, Senator the Hon. Penny Wong. The proposed board would comprise an independent chair plus five employer directors chosen in consultation between the finance and defence ministers. Bizarrely, three members would be nominated by the President of the ACTU, leaving just two members of the board to be nominated by the Chief of the Defence Force. This is unacceptable to the members of our armed forces and the thousands and thousands of veterans and retired defence personnel across Australia.

The military is a unique employer of Australian citizens. Military personnel risk their lives daily in operations around the world to protect our freedoms and the national interest, and I honestly believe they deserve better. As such, I oppose the concept of a forced merger of civilian and military superannuation schemes. This effort once again highlights the low regard in which the Gillard Labor government holds our armed forces. To make this more palatable to the defence and veteran community, once the bill lapsed, the government went back to the drawing board and came up with the creation of a defence force assessment panel.

The Defence Force Assessment Panel would review any decision referred to it by the overarching Commonwealth Superannuation Corporation relating to 11 military matters, such as death and disability pensions. This placated some in the defence sector and reassured them that their matters—unique matters at that—would be handled with some deference and special attention. However, this legislation would not hold the Commonwealth Superannuation Corporation liable to the recommendations of the Defence Force Assessment Panel. So this move is just a way for the government to pay lip-service to the concerns of our Australian Defence Force while pressing ahead with its agenda. Having worked in a number of areas within the education, Aboriginal affairs and health arenas, often when you have subsidiary structures established the corporate body or the overarching group takes that advice which it deems necessary in its decision-making processes and will then only include in its deliberations those elements that it wants. I would certainly want to see a far better and stronger guarantee that the advice that came from the Australian Defence Force would be taken up much more strongly in deliberation and certainly incorporated into the thinking of the board's decision-making processes.

I am sure that thousands of the Australian people, including many of those in my electorate of Hasluck, would like to know how, on a board of 11 people, with several defence pension schemes being integrated, the ACTU could be represented by three people and the ADF by just two. This is a travesty and highlights the coalition's position not to merge the two sectors together. How can this government really be trusted to look after the interests of our military personnel when it allows the ACTU to have significant influence over the board? There should be no special provisions for the ACTU on this board. All board members should be appointed by the minister for finance, while the defence sector should retain its representation of two as a result of the unique nature of military service and the defence community's special circumstances. As it stands, the Australian Council of Trade Unions can nominate more directors than the Chief of the Australian Defence Force. This is the world that Labor is trying to create for Australians and it is a concept that should concern any decent public sector worker or military person in this country. It raises the question once again of who is really in charge of this government. Is it the unions, the Greens, the Labor Right or the Labor Left?

The legislation currently provides that the minister for finance cannot remove an ACTU nominated director unless the President of the Australian Council of Trade Unions agrees. This will include circumstances of mental incapacitation, physical illness, nonattendance or misbehaviour, which would leave the finance minister powerless to dismiss this person. This is completely unacceptable and gives the President of the ACTU more power than the finance minister of Australia — one of the nation's most important portfolios. Somehow, this is quite acceptable to the Labor government, who rely heavily on the unions for their support. Unchecked, this legislation would allow the ACTU to have a say on how defence force superannuation would be managed, while the peer-staffed Defence Force Case Assessment Panel can be relegated to a noise that can be ignored.

Alongside these problems, the power given to the ACTU by way of numerical representation would allow it to block meetings from even taking place. A quorum of nine members is needed for a board meeting, so if there were a topic that the ACTU did not want to discuss or wanted to delay until a more suitable time, they could decide not to attend and the meeting would be have to be postponed. But the government's decision makes sense given its track record of blame shifting on important issues. If the Australian Defence Force superannuation interests are ignored or neglected, the Prime Minister can throw her hands up and blame the legislation for not allowing the dismissal of board members or for the control the ACTU has been afforded. These are important issues that impact on hundreds of thousands of Australians and it is thanks to the coalition that the taxpayer, the armed forces and the superannuation sector know about these issues.

I stand today to oppose this legislation, particularly the marginalisation of Defence Force representation on the Commonwealth Superannuation Corporation board. I equally oppose the level of influence afforded to the Labor power broker, the ACTU and the lack of dismissal powers accorded to the minister for finance with respect to the ACTU nominees.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

The bills before us concern the retirement savings of people who serve our nation. The good men and women of our military, as well as those in our public service, many of whom reside in the ACT in my electorate of Fraser or in the neighbouring electorate of my good friend and colleague the member for Canberra, will benefit from the changes in this legislation. The bills seek to consolidate the main civilian and military superannuation schemes under a single trustee. The merger will see the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Force Retirement and Benefit Scheme all administered by a single trustee, the Commonwealth Superannuation Corporation, or CSC. The CSC will be a statutory agency, as will ComSuper.

The consolidation of these schemes will help modernise the governance arrangements. The outdated position of Commissioner for Superannuation will be replaced by a chief executive officer. A board of 11 directors will govern the CSC. The governance model is in keeping with a common model used right across the broader superannuation industry. The CSC board composition will reflect member interests as well as employer interests. There will be three nominees from the ACTU, two nominees from the Chief of the Defence Force. and five nominees from the Minister for Finance and Deregulation with input from the Minister for Defence. The government will also appoint the chair.

I note in passing that those opposite have raised the bogeyman of the ACTU having representation on the CSC board. It is sort of odd, is it not? They are quite happy to have their positions on health dictated by British American Tobacco and they are quite happy to have their positions on the mining tax dictated by a few mining magnates, but they are not happy to have workers representatives—representatives of millions of Australian workers—on a superannuation board.

I note that some in the community, particularly the ex-service person community, have raised concerns that amalgamated trustee arrangements might not recognise the uniqueness of military service. This concern was raised about the original 2010 bill. Submissions to the Senate Finance and Public Administration Legislation Committee raised this issue of ensuring that ADF personnel were adequately recompensed for the unique role they play in the defence of our nation. It is important to note that the bills before the House do not disturb, and the previous incarnations of these bills did not ever disturb, members' entitlements or benefits. No existing features or benefits of military schemes are disturbed. There is no change to scheme entitlements for ADF personnel and there is no change to scheme entitlements for Commonwealth public servants. The 2010 bill recognised the uniqueness of military service, something noted by the Senate committee report's citation of the joint submission by the departments of finance and defence. That submission concluded:

Overall, the Bills seek to recognise the special nature of military service (noting that this principle is relevant to all aspects of military conditions of service) without taking away from a superannuation trustee's essential function of managing the superannuation schemes for which it is responsible on behalf of all scheme members and safeguarding members' benefit until they retire.

The submission of the Defence Force Retirement and Death Benefits Scheme Authority, or the DFRDB Authority, to the Senate committee acknowledged that the uniqueness of military service was recognised by the relevant scheme rules and not by the composition of the board. The DFRDB Authority concluded:

In the context of the above, the DFRDB Authority accepts the assurances of the Australian Government that the interests of the DFRB and DFRDB members will appropriately represented by the CSC. Therefore it is the view of the DFRDB Authority that it is not necessary to retain a separate board to administer the military superannuation schemes.

The government recognises the unique nature of military service. I recognise that too. One of the great privileges of this job is having the opportunity to honour those who have sacrificed their lives for our freedoms and to acknowledge the work that many of our service people make on our behalf. It was never the intent to dispel this recognition with these administrative changes.

Recognising the concern, the government engaged with our military community on the proposed administrative changes. These consultations have led to changes to make clear the uniqueness of military service. The bills before the House require the CSC board to have regard to that uniqueness, as provided for in the schemes established by the relevant military superannuation acts, when acting under such legislation. Further, when the board is making decisions concerning matters solely related to the military schemes, at least one director appointed by the Chief of the Defence Force must be present. As I outlined previously, the CDF will appoint two representatives to the board and the appointment of the employer representatives by the finance minister will be in consultation with the defence minister. The bills also provide for the establishment of the Defence Force Case Assessment Panel within the single trustee model. The panel will undertake functions currently performed by the DFRDB. We will also review the arrangements after the first five years to ensure that the changes have been effective.

The consolidation of these government super schemes into a single trustee arrangement is not occurring in isolation. There has been a trend in our local superannuation industry towards consolidation. In 2006, the merger of the Australian Retirement Fund, the Superannuation Trust of Australia and Finsuper created AustralianSuper, one of our largest industry super funds. This was followed in 2008 by the creation of Media Super from the merger of Print Super and JustSuper. In 2009, the Stevedoring Employees Retirement Fund and the Seafarers Retirement Fund consolidated into Maritime Super. Consolidation, particularly for smaller funds, allows the benefits of economies of scale, economies which some fund managers believe necessitate funds having at least $5 billion under management to survive effectively.

The advantage of scale is backed by studies and the experience of funds not only here but also overseas. A study by the Australian Prudential Regulatory Authority, APRA, found that large funds outperform medium and smaller funds by at least half a per cent and in some cases by a full percentage point. The APRA study, based on data over a 10-year period, was consistent with studies overseas. For example, a US study of pension fund data showed larger funds outperformed smaller funds by over four percentage points.

Scale has the potential not only to deliver higher investment returns but also to reduce administration costs. A 2009 study by Deloitte Actuaries and Consultants examined the public disclosure statements of 60 industry superannuation funds. That study found that:

In investigating the net benefit of consolidation, the Department of Finance and Deregulation's actuary, Mercer, calculated that based on the 2008 figures net investment returns had the potential to be $10 million better in 2008, $15 million better in 2018 and $19 million better in 2028.

The bulk of the potential return of $10 million in 2008 would have benefited the military schemes as $7 million of the net return is related to those schemes.

While all funds in a consolidation benefit, it is the smaller funds that achieve the greatest benefits. There is a future risk that, without this consolidation, the military schemes could become smaller relative to other funds and then have problems obtaining good investment returns.

The larger the fund the greater the ability of a trustee to pool funds and thereby lower investment costs and drive higher returns. This is because a merger sees a better spread of age profile of members amongst all the schemes. That allows a better spread of assets across age bands and risk categories. The practical implications for fund members will be an increase in the super savings of over 90 per cent of our current serving personnel. Just a 0.5 percentage point increase in the net return of a cadet who joins the RAAF and retires as a group captain will be $95,000 if that person serves a full career or $41,000 if they serve for a decade. The benefits, though smaller, will also flow through to the government's main civilian superannuation schemes.

It is easy to forget that if those opposite had their way we would not be talking about administrative changes to strengthen investment returns for those who serve our nation. Those opposite have always stood against superannuation reforms. I would like to draw the House's attention to a terrific after dinner speech delivered last night in Parliament House by the Assistant Treasurer—who I am pleased to see in this place—in which he took the audience through the history of superannuation and pointed out that when Bob Hawke took office in 1983 just 40 per cent of the workplace had super cover and that by 1991, after the Hawke Labor government's major superannuation reforms, 72 per cent of the workforce had superannuation cover.

But the Assistant Treasurer also pointed out some of the statements of those opposite when Labor under the Keating government moved to introduce a superannuation guarantee levy. The Assistant Treasurer said:

… Wilson Tuckey drew on his 'long history in the racing industry' to compare the legislation to the 'worst type of jockey … both stupid and dishonest.'

Wilson Tuckey continued:

'When the poor old employer levy gets to 12 per cent, what will it deliver? Luckily, it might deliver an overseas holiday and a few presents for the kids, but it will not deliver a retirement income at the inflated costs of those days.'

As the Assistant Treasurer pointed out, a 12 per cent super guarantee will provide a worker now aged 30 on average full-time wages with a real retirement benefit of over $553,000 at age pension age. That is certainly more than 'an overseas holiday and a few presents for the kids.'

These sorts of statements of doom and gloom at the introduction of compulsory superannuation were not restricted to members who have left this place. Then Senator Bronwyn Bishop told the Senate at the time of a conversation that she had had with a small business person. That small business person had told Senator Bishop:

But now that this compulsory superannuation payment has gone through, yesterday I had to sack a part-time employee and turn a full-time employee into a part-time employee.

The late Senator Peter Cook, for whom I had the privilege to once work, interjected very speedily and said that, given that the law had not yet come into effect, it was difficult to see how small business people would have been affected by it. But Senator Bishop was as unmoved then, as she is now, by the facts. She finished the 1992 debate as follows:

I heard Senator McMullan said, 'The difference between our systems on superannuation is that ours is compulsory and theirs is voluntary.' That is very true. That is an essential difference. Our policy is designed to make it attractive for people to provide for themselves in later life whereas this Government's is designed to penalise business, to regulate it out of existence.

Of course, that is what those opposite have often thought about compulsory superannuation—that it is an imposition.

The Leader of the Opposition once called Labor's superannuation guarantee 'a con job'. Those opposite have been fundamentally uninterested in superannuation. Perhaps the reason for that is that it is so far in the future. When you are just focused on getting your face on the evening news, why should you be thinking about things that are going to happen a couple of decades hence? No, you want to focus on the here and now, the latest poll and the latest snappy grab.

But superannuation is about much more than that. Superannuation is about ensuring that Australians enjoy dignity in retirement. Because of the lag in investment accumulation, the decisions we are making now are going to affect people like my one- and four-year-old sons, who will enter the labour market possibly around 2030 and continue in it possibly as late as 2080. My little boys are among those who will benefit from having a good superannuation scheme. It is those long-run reforms—that many of us will not be around to see—which lie at the heart of superannuation reform. It can sometimes look like a technical detail but, let me tell you, it is anything but. It is about securing dignity in retirement and ensuring that Australians are able to enjoy their retirement, comfortable in not having to worry about being able to pay the bills. I commend the bills to the House.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the ComSuper Bill and related bills dealing with the package of measures to rationalise and bring together arrangements for military and civil superannuation of Commonwealth employees. Despite the substantial exercise of the rhetorical technique known as 'attacking a straw man', which we have just heard from the previous speaker, the question before the House this afternoon is a straightforward one. The question which is before the House is whether the particular administrative arrangements which are proposed under this package of bills make sense compared with the status quo, under which there are separate and distinct funds for civilian and military employees of the Commonwealth.

The purpose of this package of bills is to bring together all of the Commonwealth military and civilian superannuation funds, including the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Forces Retirement Benefits Scheme. There will be a single trustee body formed called the Commonwealth Superannuation Corporation, and that will replace the existing distinct bodies: the Australian Reward Investment Alliance, the Military Superannuation and Benefits Board and the Defence Force Retirement and Death Benefits Authority. This package of legislation also establishes ComSuper as a statutory agency, which will provide various services to the Commonwealth Superannuation Corporation.

As I have indicated, the question before the House is whether this set of administrative arrangements to deal with superannuation for both military and civilian employees and former employees of the Commonwealth is a sensible set of arrangements, whether it is to be preferred to the arrangements which presently exist or whether this House ought to reject this set of arrangements. The view on this side of the House is that the arrangements which have been put forward ought to be rejected. That is so for three fundamental reasons. Firstly, we disagree with the central premise underlying this legislation that military and civilian superannuation arrangements ought to be brought together. Secondly, we believe that even if we could get over that particular hurdle these arrangements make inadequate provision for specifically representing the distinctive and unusual requirements of current and former military personnel as regards their superannuation needs. The third reason we consider this legislation ought not to be passed is that a privileged role is created for the Australian Council of Trade Unions in the governance arrangements, and that is a role about which we are deeply suspicious.

I will start with the issue of principle. Does it make sense to merge the superannuation arrangements of current and former military employees with current and former civilian employees? We argue that that does not make sense. To proceed on that basis is to fail to take account of the unique nature of military service, including at its core the risk—which is assumed by all who serve as uniformed personnel in our military forces should they be assigned to a theatre of war—of early death or incapacitating injury. Reflected in that is the requirement, in administering the superannuation arrangements of current and former military personnel, to bring to bear specific expertise about the needs of current and former military personnel and about the issues which are of concern to them. Under the present arrangements there is specialist military knowledge and capacity which applies in the governance of the superannuation schemes which have been established to assure the retirement incomes of military personnel. The loss of that specific military knowledge and capacity is a clear cost of the arrangements which are proposed for the consideration of this House. We say that there is no adequate offsetting benefit to justify the incurring of this cost. Further, we are particularly concerned that this set of administrative arrangements will contribute to a blurring, in the eyes of the parliament and in the eyes of the Australian people, of the critical distinction between military service and civilian employment. We are worried that the unique conditions of military service will be, in the administrative application of these arrangements, subordinated to and subsumed by civilian conditions of service.

Secondly, even if it were not for that fundamental point of principle—which we on this side of the House consider to be absolutely central—the specific arrangements which have been proposed, which are before the House today, give wholly inadequate representation to the unique and special interests of members of the funds who are current or former serving military personnel. As has been pointed out by other speakers, under these arrangements there will be two board members of the Commonwealth Superannuation Corporation who will be appointed by the Chief of the Defence Force. This quota is outnumbered by the three board members who are appointed by the Australian Council of Trade Unions—appointees, it need hardly be added, who are most unlikely to have any familiarity with or affinity for the unique nature of military service. This is a set of arrangements which wholly fails to take account of the specific and distinctive needs of the members of these funds who are current or former serving military personnel. The point is made very clear, I think, when you compare it to the present arrangements, which do secure adequate representation on the part of those with a military background. For example, the Military Superannuation and Benefits Scheme has a board of five trustees who are appointed by the Minister for Defence Science and Personnel or by the Chief of the Defence Force. The Defence Force Retirement and Death Benefits Scheme is run by the DFRDB Authority, which has five members. One is the Commissioner for Superannuation and the other four are appointed by the minister assisting the Minister for Defence and by the chiefs of the three armed services. That is to say, under the present arrangements there are specific mechanisms for ensuring adequate representation in the governance of these superannuation funds by people who have knowledge of and familiarity with military matters.

At the very least, in the arrangements that are before the House today we would have expected to see a separate board giving representation to the members of the funds who are current or former serving military personnel and ensuring that there are people on that board with appropriate knowledge and expertise. I make the point particularly that these arrangements are likely to result in both current and former service men and women becoming more remote than they are at present from decision making in relation to their superannuation funds—decision making which is critical to their own personal financial futures. That will be particularly the case for former service men and women who are no longer employees of the Commonwealth and for those who are not members of a union or other employee organisation. It is of particular concern that these arrangements would leave people in that circumstance feeling that their interests are less likely to be adequately represented than they are under the present arrangements.

Let me turn to a third and equally fundamental area of concern which the coalition has with the arrangements embodied in this legislative scheme. These bills propose to create a unique and privileged role for the Australian Council of Trade Unions in the governance of superannuation for current and former military personnel and current and former civilian employees of the Commonwealth. This raises many questions. Why should there automatically be representatives of the ACTU on this board? What particular competence, expertise, specialised knowledge or capability do representatives of the Australian Council of Trade Unions have in managing financial assets with a view to maximising future financial performance in the interests of members of the funds? On what possible policy basis would you quarantine specific places on this board for representatives of the ACTU? Why would you possibly do that, unless of course you are a government determined to do the bidding of one set of narrow, sectional interests in the community—namely the union movement?

I am sorry to say that the only explanation which can be found for this curious proposal is that we have a government once again determined to look after its mates in the union movement. There has been very little attempt to justify these remarkable governance arrangements. There has been very little attempt to come up with any theoretical or philosophical base for giving the union movement privileged access to decision making in relation to these funds. These funds, of course, will contain some members who have a civilian background and some who have a military background. Very many of them will have no affiliation with unions at all. Very many of them may have no appetite at all for having the union movement looking after their retirement savings, but they are given no choice under this government. They are compelled to have their own vital financial interests, the management of their superannuation funds, under the supervision of a board which has a quota drawn from the ACTU.

This is a particularly retrograde piece of policy. This is a piece of 1970s corporatist thinking that I would have hoped had disappeared into the past, along with the days when Frank Sinatra could come to Australia and be turned around by the union movement because he had insulted a journalist and the result was that all relevant unions immediately went on strike. On the specific question of the capacity of these ACTU representatives to bring to bear specialised knowledge and experience in relation to military matters—something of high importance to a significant proportion of members of these funds—it is clear that there will be no such experience, no such capacity.

When one looks at the details of these governance arrangements, it is frankly bizarre that the ACTU representatives will in many circumstances be unable to be dismissed by the minister without the specific consent of the President of the Australian Council of Trade Unions. This is a wholly inappropriate approach to an important question of governance. An equally inappropriate aspect of these arrangements is that in practical terms they would allow the nominees of the Australian Council of Trade Unions, if they were to caucus beforehand, which I suspect is very likely, the capacity to even deny a quorum to this board so it could do no business. The arrangements set out in this legislative package are not supported on this side of the House. They are not in the best interests of the military members of the fund, nor the civilian members. (Time expired)

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Thank you for your contribution to the question. The question is that the bill be now read a second time. I call the Minister for Veterans' Affairs and Minister for Defence Science and Personnel.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

And minister for Aboriginal health.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

And a range of things.

Ms Ley interjecting—

Looking after them too, we are.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Here we are, up here, thanks.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Is that you, Mr Deputy Speaker? I beg your pardon. How are you? It is good to see you here. This is very important piece of legislation, but unfortunately I have been very disappointed by the contributions from our opposition friends.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

You'll get over it.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I know I will. The member for Fadden has given us gratuitous advice about how we should run the world, as have the member for Paterson, the member for Wannon, the member for Hasluck and the member for Bradfield, whom we just heard.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

You should take all of it.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Member for Fadden. That will be enough.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I have to say that, whilst I was not surprised, it reminded me that once they put on the cloak of the coalition they must have a frontal lobotomy. You think, when they come here, they are free thinkers and actually understand the community and the people they work with. Then they come in here and say, 'We can't have unions.' The member for Bradfield asked what capacity unions have to understand the importance of superannuation. He asked how they know how to make decisions about the benefits that might accrue to their members from superannuation funds. I suggest to the member for Bradfield, and indeed to my comrade the member for Fadden opposite, that they actually look at the performance of super funds which are run by trade unions. They will find that some of them are among the best and highest-performing funds in the country. They are very good funds. They are run effectively, with boards which have independent directors and all the rest of it, by the trade union movement in the various industry sectors. They run very well, so let us not have the cant which has come from the member for Bradfield—the sophisticated, snobby cant from the North Shore of Sydney—talking about what unions can and cannot do. It is okay for the employers: 'We know what we're doing because we're educated.' Trade unionists are too, and they are a lot bloody smarter than you give them credit for.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Just be careful with the colourful language, please. Hansard is very sensitive.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Your sensitive ears, I understand, I do not want to upset you. But I have to say that the member for Throsby, the member for Dobell, the member for Oxley and the member for Fraser get it. They have not had this sudden transformational experience, once they have joined the parliament, that leads them to disregard the employees of this country, the workers of this country, and their rights to organise and to be part of an organisation. Mr Deputy Speaker: I just wonder.

I think it is important that we go to a couple of the points. There are a number of issues. None of these bills—the Governance of Australian Government Superannuation Schemes Bill 2011, the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011—change the design of the civilian and military schemes or members' entitlements. It is important to appreciate that, when we are talking about members, the total membership will be around 682,000, of whom around 200,000 will be military members and around 482,000 will be civilian members through the old ComSuper. Let us think about this and the construction of the board and the appropriateness of proportionality and all the rest of it, and then think about the relevance of the comments which have been made by the members opposite. I recall having a very good discussion with the shadow minister, Mr Robert, who I must say was very frank about his concerns. One of the issues that Mr Robert raised with us—it was also raised last year at the inquiry held into the bills by the Senate Standing Committee on Finance and Public Administration, and in a minority report which reflected what the shadow minister said to me—was that the proposals:

… undermined the longstanding commitment to and understanding of the unique nature of military service.

We listened to the opposition, and I particularly listened to the shadow minister when he raised that question. The government has subsequently made a number of amendments to the bills to ensure the uniqueness of military service is maintained and properly recognised.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Appreciate it!

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I am pleased it is appreciated. Then there was the issue of lack of consultation. Let me make it very clear that I, personally, have met with the DFWA and the RSL regarding the amended bills. Both were consulted on the revised legislation and are satisfied that the amendments address of their concerns. So let us not have the argument that has been put that somehow or other there is no support for these proposals in the veterans community, because there is. We did the negotiation. We discussed it with people to make sure they were onboard with us—not necessarily onside with us—in terms of these recommendations and this legislation.

There was a question of a lack of demonstrated benefit, which of course we addressed. I say to the members opposite that, really, this is very important legislation for Australian Defence Force personnel, whose benefits will be substantially improved as a result. It is estimated that a 0.5 per cent increase in the net investment return for a member of the RAAF, who joins as an officer cadet and rises to the rank of group captain at retirement, will lead to an increase in superannuation benefit of $95,000 over full career, or $41,000 over 10-years service.

This bill seeks to improve the level of member benefits, and it will, improve service levels and the governance of the main civilian and military superannuation schemes by establishing the Commonwealth Superannuation Corporation. The opposition does not disagree with the merits of this legislation; it disagrees with one component of it—the right of employees to be represented by a trade union and the right of employees to have their trade union's peak body represent them on the board. Let me just put to bed once and for all the clear contradiction between that position and the position which operated whilst they were in government. The Superannuation Act 1990 establishes the current civilian superannuation board, ARIA, with the appointment of members to the board set out in the trust deed at clause 4.1, which provides:

Three of the Trustees shall be persons nominated by the Australian Council of Trade Unions …

It is an accepted principle. The appointment process for the consolidated board is consistent with the existing process. So let us not have this confusion that somehow or another we are doing something new and different. We are doing something which is consistent with past practice.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Past Labor practice.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

This existed while you were in government for—how long, 13 years?

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Glorious years.

Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

For all that time, we had a superannuation board which had three representatives nominated by the ACTU. So let us not be confused any longer about the contradictions which are so evident in the position being adopted by the opposition. I appreciate that the member opposite, the shadow minister, who is a genuinely nice sort of bloke, has to do jobs that he sometimes does not enjoy. I appreciate that he probably does not enjoy this at all. I hope that this is not a genuine reflection of his attitudes towards the trade union movement.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.