Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Investment Funds Legislation Amendment Bill 2021 concerns the Future Fund, which is a fund of some provenance. It's probably worthwhile, for the benefit of members of this place, to go through some of the history of the establishment of the Future Fund. It was established in 2006-07 to fund the defined benefits liabilities of public servants, parliamentarians, judges and others who were the beneficiaries of a defined benefits superannuation fund. There was some controversy as to whether this was the best use of capital holdings of the Commonwealth. Many took the view that it was unnecessary and that the capacity of the Commonwealth to fund these liabilities through consolidated revenue was sufficient to meet current and future risks, a debate which continues today. And the fact that the fund still hasn't made a disbursement from its assets to fund the superannuation liability of the Commonwealth probably speaks to that underlying truth.

That being the case, it's now well established as a part of the architecture of the financing of the Commonwealth, and it has been added to by both sides of parliament since its establishment in 2006-07. For example, in 2000, in the period of the Rudd and Gillard governments, we established an education fund and a health and hospital fund to fund the Commonwealth's contribution to school, university and tertiary education as well as to the hospital system, including medical research. In 2014-15 the then Abbott government decided to close down Labor's health and hospital fund and fold the remaining proceeds of that fund into the newly established Medical Research Future Fund, so the assets of the health and hospital fund became the assets of the Medical Research Future Fund. In 2014 the Abbott government also established the Disability Care Australia Fund with the intention of funding, in part, the National Disability Insurance Scheme out of the earnings of that fund.

In 2018 the Aboriginal and Torres Strait Islander Land and Sea Future Fund was established to assist the Commonwealth to make contributions to the Indigenous Land Corporation. And in 2019, quite famously, the Emergency Response Fund was established, together with the Future Drought Fund, to provide capacity for the Commonwealth to make disbursements in response to national emergencies and natural disasters and, more importantly, to help state and local authorities, together with the Commonwealth, to build the infrastructure which would help mitigate infirm economic assets to assist them in withstanding the damage of natural disasters. It has become a matter of some controversy in those drought and fire affected communities. I see that the member for Eden-Monaro is in the House. She has been quite outspoken on the fact that no moneys have been disbursed out of this fund to assist those fire affected communities. If you look at the member for Eden-Monaro together with the member for Gilmore, there would not be two electorates in the country that have seen more devastation over the last three years due to the impact of fires than theirs. It is a matter of deep concern, if not boiling, seething anger, that the government has not lived up to its promise to assist those communities in their hour of deepest and darkest need. I'm quite certain we will hear more from the member for Eden-Monaro and the member for Gilmore over the course of this debate, and probably over the course of the next six months, advocating as they always do for the community and advocating that the Commonwealth do what it promised to do and ensure that this fund is used for its intended purpose. The fund has not been established as a vanity project; it's been established to assist communities in need that have been or are at threat of future devastation because of natural disasters.

This is the context, the background, the land upon which the amendments before the House today are being debated. It is a matter of quite some national importance. Look at the subject matter of them: medical research; Aboriginal and Torres Strait Islander land purchases—we can assist our Aboriginal and Torres Strait Islander communities on their project of self-determination and control of land and assets, with the economic and cultural benefits that come with that; drought resilience; emergency resilience; and the funding of Labor's National Disability Insurance Scheme.

There are some four or five amendments before the House today that I will speak to. Firstly, the bill creates a new employment framework for the Future Fund Management Agency. This is the agency which has the statutory responsibility for managing not just the Future Fund but the other five funds which I have outlined in my address this afternoon. The Future Fund Management Agency employs staff, and it is the responsibility of those staff to supervise the fund managers and ensure that all the statutory requirements of the fund are complied with. The provision of the first schedule of the bill will exempt it from the standard requirements of the Australian Public Service, like other specialised agencies such as: ASIC, the Australian Securities and Investment Commission; APRA, the prudential regulator; and the Reserve Bank of Australia. We are not opposed to this change; we recognise the unique charter of the Future Fund and the employment market in which it operates. Many of the employees in funds management and the managers of funds earn many multiples of the salaries that even the most senior public servants would earn. The purpose of these provisions is to ensure that public employees engaged by the Future Fund Management Agency are able to be engaged and retained; that is very important.

I want to take this opportunity, given that the bill goes to Public Service employment, to say a few things about the contribution public servants have made to our response to the COVID pandemic during these most difficult two years. I am sure not a member in this place would object to me paying tribute to the contribution that public servants have made. Government takes the glory but public servants do the vast amount of the work in this area. They have worked hard on the ground in airports, in our regions and in call centres around Australia to ensure that Australians have had the support they have needed throughout this pandemic. I ask you to cast your mind back to that period between March and June of 2020, when, in a few short weeks, we saw nearly half a million people queue up at Centrelink offices around the country. Many of those people were approaching a Centrelink office for the first time in their lives, in a desperate situation, not knowing how they would pay for food, rent, mortgages or any of the other requirements in what they thought would be a protracted period of emergency lockdown. It was way beyond the capacity of the systems, let alone the people who worked in Centrelink, to process that in the way that was needed.

Public servants came from every corner of the Public Service and every corner of the country. They picked themselves up from one agency and were relocated to another agency, often virtually, and did the job of processing those claims. That was just in one agency. It was repeated in many others. The Australian Taxation Office, for example, was responsible when the government was dragged kicking and screaming into introducing the JobKeeper arrangements. It was also responsible for administering the superannuation early release scheme. The Australian Taxation Office managed a similar job of work, remarkably, from remote locations around the country.

So I want to take this opportunity, on behalf of the Australian Labor Party, to thank those public servants, because I don't think the government has done that. I want to thank those public servants for the work that they've done through a trying and difficult period. At times, I was incredibly critical of the work that the government had done. During the various review committees—whether it was the COVID review committee chaired by Senator Gallagher, the various Senate estimates processes or the House committees—and even in the adversarial forum of this chamber, I had some harsh things to say of the government, and it was warranted and necessary. I would hate for those public servants to feel that those harsh words were directed at them. They most certainly were not. They are doing the bidding of their masters, as they do, as an apolitical public service is charged with doing. So we simply thank them for their service.

The second schedule in this bill provides a partial exemption under the Freedom of Information Act 1982 for the Future Fund Board of Guardians and the Future Fund Management Agency in relation to investment documents. I want to say something about this, because this provision has a fascinating progeny. When it first burst onto the legislative scene, it had a younger sister, and that younger sister was a provision intended to be made by the Treasurer which would have applied to all of the APRA regulated superannuation funds. That provision did exactly the opposite of what this provision, which applies to the government regulated Future Fund, does.

Let me explain. Schedule 2 will protect, in part, the Future Fund, its board of guardians and the management agency from freedom of information applications in relation to investment documents. What will those investment documents be? It may be a document which has been provided by an investment adviser about the valuation of an asset. It may be a more recent audited valuation of a holding document. This is a perfectly commercial arrangement, because it would be perverse in the extreme—because superannuation funds do not buy assets; they sell them as well—if the government, representing the taxpayers of Australia, were proposing to sell an asset that it owned and the counterparty to that transaction could lodge a freedom of information request in the midst of that commercial transaction and have access to a whole heap of commercial documents which prejudiced the Future Fund in its part in a sell-side transaction. It would be perverse in the extreme if the act worked in that way. So this is perfectly commercial for the Future Fund and its board of guardians, and it's perfectly sensible for the government to bring legislation to this effect to the House today.

What is extraordinary is that, at the same time that they were moving this provision into the parliament, they were doing the exact opposite and proposing to create a requirement upon every APRA regulated superannuation fund in the country to disclose the details, including the book valuation, of every asset in their portfolio. You don't need to be a Rhodes scholar—and hasn't the currency of a Rhodes scholar been devalued over the life of this government and its predecessor?—to understand what is going to happen in those circumstances. In exactly the same way that the Future Fund would have been prejudiced in a sell-side transaction, so would every APRA regulated fund in the country. Deputy Speaker, you would know, because you'd have a close eye to these matters, that that's you and me, that's every member of this parliament and that's every Australian employee who has their money in an APRA regulated super fund. This was going to cost them billions of dollars. An ideological obsession, driven by the Treasurer and those who advise him, was going to cost Australian retirees and those saving for their retirement billions and billions of dollars.

It was Labor's position that what was good for the goose was going to be good for the gander. If they didn't fix it, we wouldn't be supporting this. Thankfully, after exhausting every other option, the government has decided to do the right thing with the APRA regulated funds, and it's Labor's happy duty to advise the House that we'll be supporting this provision in this schedule in this bill. A dawning of common sense comes upon the government, not before due time.

Schedule 3 of the bill amends the Medical Research Future Fund Act 2015 to provide for the administration of the Medical Research Future Fund grants program and to provide a new disbursements framework. I want to pause and repeat that: a new disbursements framework. It should be noted that this legislation provides for a maximum of $650 million to be annually disbursed from the Medical Research Future Fund. This represents something that has become all too common over the life of the Morrison government. This represents a direct breach of promise to the Australian people. We have become so accustomed to the Prime Minister promising one thing and doing another, to the Prime Minister saying one thing and hours later denying that he ever said it, to the Prime Minister telling one group of people one thing and another group of people something completely different, and to the Prime Minister saying to some of our most trusted allies that we have a commercial arrangement with them, all the while knowing full well that he's proposing to do the exact opposite. Is it any wonder that everybody, from our international allies to members of the Prime Minister's own government to those of us on this side of the House and every member of the Australian public, now knows that you cannot trust a thing that the Prime Minister says?

An opposition member interjecting—

Yes, he 'sent a text'—we saw it in question time today. You could have knocked me over with a feather. You get this bloke who stands up in defence of his own sorry track record of deserting the country in its hour of deepest need and tells a completely fictitious fable that he sent the Leader of the Opposition a text message telling him that he was going to be in Hawaii. The only problem with this story is it wasn't true, like so many of the stories and tall tales—I cannot use the unparliamentary word. They're simply not true, and they're—

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

I call the minister on a point of order.

Jason Wood (La Trobe, Liberal Party, Assistant Minister for Customs, Community Safety and Multicultural Affairs) Share this | Link to this | Hansard source

On relevance: I'm just wondering where this is going.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I'm happy to inform the member. What I'm telling members of this House—and they need to know it—is that schedule 3 of this bill follows a long line of broken promises, untruths, misdeeds and double-dealing. So, whether it's our international allies, his own colleagues, this parliament or the Australian people, this Prime Minister cannot be trusted because he cannot tell the truth.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The member will resume his seat. The member for Mackellar?

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

The member is not speaking to the bill.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The member will be relevant to the question before the chair.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

If the Prime Minister was going to tell the truth, he would be coming forward in this debate today and saying: 'I know that I promised that the disbursements from the Medical Research Future Fund would be $1 billion a year, and I have brought a bill to the House which is a backflip on that promise. The fund will now only disperse $650 million a year. I did not tell the truth. I misled the Australian people once again. I have treated the Australian people like I've treated the French president, because I am incapable of telling the truth, whether it's an international deal around submarines or the Medical Research Future Fund.'

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The member will resume his seat. I call the member for La Trobe.

Jason Wood (La Trobe, Liberal Party, Assistant Minister for Customs, Community Safety and Multicultural Affairs) Share this | Link to this | Hansard source

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

He's congenitally incapable of telling the truth!

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Could you please be relevant to the question?

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I don't know how I can be any more relevant to the bill before the House. He promised to deliver $1 billion and he's come up with $650 million. I know they do not like it, but they voted for the guy. I didn't. Your leader is congenitally incapable of telling the truth. He cannot tell the truth, whether it is about medical research or submarines. He cannot tell the truth.

Jason Wood (La Trobe, Liberal Party, Assistant Minister for Customs, Community Safety and Multicultural Affairs) Share this | Link to this | Hansard source

He keeps reflecting on the member.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Yes, could you please direct your remarks to the bill?

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Thank you, Deputy Speaker. This is another broken promise from the failed Morrison government. Evidence provided to the Senate says that the lost $350 million per year is nearly $1.2 billion in lost health and productivity gains per year across the medical sector. This is the cost of a Prime Minister who cannot tell the truth—$1.2 billion in lost health and productivity gains per year across the medical sector. They may try and defend their bloke who cannot tell the truth, but this is the cost to Australians—$1.2 billion in lost health and productivity gains per year across the medical sector. So whether it's Neil Mitchell asking him if he's ever told a lie or if it's the Australian people asking, 'What is the cost of you not telling us the truth?' we have it here in black and white in this bill; it's $1.2 billion a year and Australian lives at risk. We've seen this story before.

The fourth schedule of the bill amends the Emergency Response Fund Act 2019 to transfer responsibility for expenditure from the Emergency Response Fund to the newly established National Recovery and Resilience Agency. Labor wants to see more funding going out to the communities affected by bushfires and floods. We are very keen to ensure that those communities receive the support that the Prime Minister promised to deliver but about which he has once again misled them. He did not tell the truth. We all remember that forced handshake: in the midst of community firefighters and volunteers who'd put their bodies and communities on the line, who didn't know if they would return home, all the Prime Minister was interested in was a photoshoot of him shaking hands with someone in orange overalls. Against that background, the very least that they are entitled to is some funding from these funds before the House today.

The government has failed repeatedly to support bushfire affected communities across Australia, including in the Southern Highlands and the South Coast of New South Wales, all the way down to the Victorian border. These are devastated communities, but the Prime Minister only turns up when it's election time for a photo-op. He'll probably try to shovel some money out the door on the eve of the election, but local communities won't buy it. They want a government that's on their side for the long term, and they're certainly not getting it with this mob. They're waiting for their houses to be rebuilt. They're waiting for their community centres to be rebuilt. They're waiting for their services to be re-engineered so they'll be more resilient in the future.

We've got a lot to oppose with the Morrison-Joyce government. Australians are sick and tired of being told one thing only to find out that it's not true. We won't be opposing this bill. It does more good than bad. But we will be moving a second reading amendment.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Order!

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The member for Mackellar seems to have something stuck in his throat. It's probably shame. I can understand why. If I had to sit behind that bloke, I'd be ashamed as well. He has a lot to be ashamed of.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Order! Please return to the debate.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

With these contributions in mind, the second reading amendment that has been circulated in my name—

I'm sure if the member for Mackellar wants to get himself on the speaking list he'll have the opportunity to do that. He should wait for his turn. Lord knows he likes the sound of his own voice, and there are not very many opportunities on the legislative agenda this week for a member of the government to speak, because there's not much legislation before the House. It's the second-last sitting week of the year, and least of all is there a bill to deal with a federal ICAC. It's nowhere to be seen. We are—what?—1,015 days in and it's nowhere to be seen.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Has there been any part of this speech that's been relevant?

Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

This has been hurtful to the member for Mackellar. Hard truths are hurtful, but sometimes hard truths need to be told. With those contributions in mind, I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) the Coalition Governments continued diminution of the Australian Public Service, including through its arbitrary staffing cap policy and growing reliance on private consultants, contractors and labour-hire to perform core public sector work;

(b) the complete aversion to transparency and scrutiny, and degradation of the Freedom of Information regime, experienced over the Government's time in office;

(c) the Medical Research Future Fund was credited with savings from Health despite former Prime Minister Tony Abbott repeatedly saying there would be 'no cuts to health' and when established was promised by the government to provide $1 billion in annual medical research funding, which is a promise this bill explicitly breaks by setting a $650 million annual research funding limit; and

(d) the Government has consistently left communities behind through its failures in emergency management and disaster relief, particularly in relation to the 2019-20 Black Summer bushfires".

I commit to a courtesy that the member for Mackellar never showed me in my contribution and that is to remain silent throughout all of his contribution. I'm sure that will be a Herculean effort.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Tim Watts (Gellibrand, Australian Labor Party, Shadow Assistant Minister for Communications and Cyber Security) Share this | Link to this | Hansard source

As the Australian people know, they vote for you. I'm happy to second the amendment.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be read a second time. To this the honourable member for Whitlam moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be disagreed to.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

It is with a heavy heart that I speak against the member for Wollongong's amendments to this bill. Between him sticking up for industry super and the left-wing front groups that they're trying to protect by opposing electoral funding reform that makes it more transparent to the Australian people, what are those opposite up to? This is another second reading amendment. Let me guess what it's designed for. Is it designed for policy? No. Is it designed to help their donors? Yes. Is it designed to actually put out more misinformation, more untruths and more astroturfing from those opposite? Absolutely.

I say to those opposite: keep calling ordinary Australians extremists, keep supporting your left-wing front groups and keep opposing transparent electoral laws that call some of your mates to account. The Australian people aren't stupid; they will see right through you. And they will see right through that second reading amendment, like they will see right through all the second reading amendments those opposite have put up today. They complain about there not been enough debate or enough bills in front of this chamber. Maybe if those opposite only spoke when they had something useful to say that would clear about half the parliamentary calendar. Maybe if, instead of playing games for the benefit of open foundations and theyvoteforyou.org, they came in here and served the interests of the Australian people rather than the interests of organised capital in the form of industry super and the left-wing front groups that now represent so much of what they do in this chamber and so much of what they want to inflict on the Australian people, all of us would be better off. But they can't help themselves. They are now so bereft of ideas, so bereft of policy and so bereft of anything to do in the interests of Australia or the Australian people, that they can't help themselves.

The member for Whitlam, on a bill that concerns the management of the Future Fund, had to introduce extraneous material around the French president's reaction to having a $90 billion submarine contract cancelled or not renewed. Does he really think that, when the election comes around, the working men and women of Australia who they used to represent—but they haven't met them for about two generations—will honestly sit there and say that they want to vote for a political party that, when they had their chance to stand up for Australia or for the French, chose to stand up for the French? But that seems to be the tactic of the Labor Party these days.

Those of you listening might be interested to know that this bill is called the Investment Funds Legislation Amendment Bill 2021. It is not the 'they vote for us bill', the 'left-wing front group bill', the 'organised capital bill', the 'Industry Super bill' or the 'we back the French over our own countrymen bill'; it's the Investment Funds Legislation Amendment Bill 2021. This bill is designed to give effect to a range of amendments to improve the operation of the Australian government investment funds and enhance the ability of the Future Fund Board of Guardians—which I imagine is about 13 owls—and the Future Fund Management Agency to continue investing for the benefit of future generations of Australians, which is something that their mates in Industry Super should try for a change.

This bill provides a new employment framework for the Future Fund Management Agency to remove staff from the Australian Public Service and provide better paid jobs with more flexibility, more meaningful roles and appropriate employment models. It gives a partial exemption under the Freedom of Information Act for the Future Fund's investment activities; establishes a new disbursements framework for the Medical Research Future Fund to bring greater certainty to funding—something the member for Whitlam apparently thinks makes the Prime Minister dishonest; provides for the transfer of administrative responsibility for expenditure from the Emergency Response Fund to the National Recovery and Resilience Agency; and introduces a range of administrative amendments to improve the operation of the MRFF and the ERF.

The Future Fund was established by the Howard government in 2006. Since then, the Future Fund has grown by over $136 billion, and the board has become responsible for the management of five other Australian government investment funds, with total funds under management of more than $245 billion as of 30 June 2021. The Future Fund, unlike so many of the donors of those opposite, has a proven track record of managing investments. It doesn't hide it in unlisted vehicles, whose valuations are mysterious—and now Industry Super don't want to reveal how they're doing it. It actually has a proven track record of managing investment portfolios on behalf of the government and the Australian people and maximising returns over the long-term—as of 30 June 2021, delivering for the Future Fund a return since the beginning of 1.4 per cent per annum verses a target of 6.6 per cent. I bet that there are a lot of ordinary Australians, a lot of hardworking men and women of this country, who would love to give their superannuation, their retirement savings, to a fund like this as opposed to Industry Super, who they're forced to give their money to just because they donate money to the Labor Party. Wouldn't it be good to have real choice in retirement incomes for ordinary Australians?

This bill makes important amendments to the employment framework of the FFMA to reflect its unique operating environment within global financial and investment markets, while still ensuring the agency remains subject to appropriate controls, in line with community expectations. The new employment framework will enhance the Future Fund's independence from government, improve its recruitment and retention of specialised staff, and allow it to continue to maximise investment outcomes on behalf of the Australian people.

The partial exemption under the FOI Act for documents relating to investment activities will provide an appropriate balance between maximising investment returns and ensuring appropriate transparency. The Future Fund regularly produces, negotiates and receives documents from third-party fund managers that include confidential, competitive and commercially sensitive information. The risk of disclosing highly sensitive commercial and proprietary material has led to investment managers withholding information or reducing their engagement with the fund. This presents an investment and governance risk. In particular, it can result in reduced access to investment opportunities and negatively effect investment outcomes, and that directly impacts the Australian people and is not an outcome that this government wishes to encourage. The exemption will provide certainty to the Future Fund and its investment partners that sensitive investment information is automatically excluded from release under FOI laws. The FOI Act will continue to apply to documents concerning the Future Fund's non-investment activities. In addition, the Future Fund will still publish details of its actual investments and will continue to be subject to parliamentary scrutiny.

The removal of FFMA staff from the Australian Public Service and the partial FOI exemption for Future Fund investment activities are consistent with the arrangements in place for other government entities including the NBN, Australia Post, Export Finance Australia and others that regularly deal with commercially sensitive information and require more market orientated employment practices. These are sensible amendments. No wonder those opposite want to move amendments to them that will improve the operation and performance of the Future Fund. Indeed, Labor's former finance minister, the Hon. Lindsay Tanner, dedicated an entire 2009 National Press Club speech to extolling the virtues of both of these changes. In that speech, Mr Tanner argued that an employment framework outside of the APS would aim to reinforce the independence of the board but still provide values and standards for the agency, particularly with respect to its responsibilities relating to public money. On the partial FOI exemption for investment activities, Mr Tanner observed that announcing the removal of certain activities from FOI laws at the Press Club is akin to announcing a reduction in judicial discretion at a meeting of lawyers. But I would assure you that this will not impinge in any significant way upon the documents that the Future Fund will continue to release under the FOI Act.

The new disbursement framework for the MRFF will provide certainty of funding to meet the government's MRFF 10-year investment plan and support significant disbursements over the long term to fund vital medical research and medical innovation projects. The medical research fund is one of the great innovations of this parliament. It has led to hundreds of thousands of Australians' lives being made better and being elongated. And who knows, in the decades ahead, it will probably have that impact not just here but around the world. Under the current framework, the disbursements from the MRFF are determined annually by the Future Fund board. The board's calculations are largely based on the benchmark rate of return for the fund, which is linked to the RBA cash rate. This framework creates uncertain and volatile disbursements, which affects the orderly planning of grants programs from the fund. With the fund now exceeding its target balance of $20 billion by over $2 billion, the government is implementing a new disbursement framework that will provide a fixed maximum annual disbursement of $650 million from 2022-23, something the member for Whitlam is not happy about. This will allow investment returns above this level to accrue to the fund corpus, which can be accessed in later years when investment markets are more challenging. The reduction in distribution volatility will provide greater certainty of funding for the health and medical research sector and will allow the important commitments under the MRFF 10-year investment plan to be met. The amendments will also enable the government to issue a new investment mandate for the MRFF with a higher and more suitable benchmark rate of return aligned to other risk-seeking funds managed by the Future Fund, including the Future Drought Fund, the Emergency Response Fund, and the Aboriginal and Torres Strait Islander Land and Sea Future Fund.

A new investment mandate will increase expected earnings over the medium term and protect the level of disbursement over the long term, helping to fund vital medical research and medical innovation projects. The transfer of responsibility for the administration of expenditure from the ERF to the NRRA implements the government's decision to establish the NRRA with a clear mandate to enhance national preparedness for, and recovery from, natural disasters. I would've thought this was a good thing. I would've thought those opposite would not only support this but be urging the government to pass this sooner rather than later. Instead, they move second reading amendments. Why? So left-wing front groups can misrepresent the voting pattern of members of this House. Is that really the kind of party that should be put in charge of government? That's what we're faced with at the next election. In response to the Royal Commission into National Natural Disaster Arrangements, the government announced in the 2021 budget the establishment of the NRRA to help support local communities to respond to large-scale natural disasters and undertake new initiatives to manage the impact of future events and the changing climate.

Finally, I would say these amendments to the Emergency Response Fund Act will ensure that legislative and administrative processes are in place for payments from the ERF to be administered by the NRRA. I reiterate my disappointment at the behaviour of those opposite with their tactics to constantly attempt to work with outside left-wing front groups, who, this very day, they have tried to protect from greater scrutiny in order to misrepresent the voting records of those in this House. (Time expired)

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | Link to this | Hansard source

The Investment Funds Legislation Amendment Bill 2021 returns to the House following the completion of a Senate inquiry. Three key issues were raised in that inquiry that relate to this bill: firstly, the proposed partial FOI exemption for documents of the Future Fund and Future Fund Management Agency with respect to their investment activities; secondly, the removal of the Future Fund Management Agency staff from the Public Service Act; and, thirdly, the $650 million maximum disbursement from the Medical Research Future Fund, which amounts to a cut to a commitment that was made by the Abbott government in respect of the Medical Research Future Fund and its disbursements.

On the partial FOI exemption, two main points were raised during the Senate inquiry. The first one is, on the one hand, the inconsistency from this government when it comes to this particular partial FOI exemption, and, on the other hand, making industry superannuation funds disclose particular financial information, including internal valuations of unlisted assets, and values and positions taken in derivative markets at regular intervals. Thankfully, the government has backed off on that issue. It was part of the government's Your Future, Your Super reforms and it was scheduled to commence on 31 December this year. It would have put industry superannuation funds in particular, but others as well, at a disadvantage to funds like the Future Fund which weren't required to disclose their investments.

This particular regulation would have required industry superannuation funds, in respect of derivatives, to disclose the precise value and percentage of the holding. That is counterintuitive. It limits the ability of those funds to work within derivative markets and get the best deals on those derivatives. And, in doing so, you are only reducing the returns that come to members of those superannuation funds. That would have been the result. Requiring those funds to list those holdings when other funds wouldn't have had to means they are at a competitive disadvantage, and, ultimately, that lowers the returns from industry superannuation funds to members.

Thankfully, the government has seen sense. Thankfully, the government has backed off on that reform because all those who work in the industry, and even the Financial Services Council, weren't supportive of this reform. This is yet another demonstration of this government's ideological obsession with trying to punish people who are in industry superannuation funds—for no reason other than they can't get over the fact that workers and employers working together, through the management of an industry superannuation fund, do a better job of managing those funds and acting in the best interest of those members than their mates in the financial planning sector that operate the big retail and commercial funds for profit.

The breadth of the proposed exemption in conjunction with the Morrison-Joyce government's appalling track record on scrutiny, transparency and accountability is another issue. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry demonstrated that even our largest, most trusted banks, with multiple levels of regulation already, had engaged in widespread financial fraud and other criminal conduct at the expense of their clients and their customers. While secrecy has a crucial role to play in commercial operations, the findings of the banking royal commission demonstrated that a degree of transparency and accountability is also important.

The compulsion of this government to throw a cloak of secrecy over the operations of the Future Fund, compared to the operation of industry superannuation funds, was even more concerning, particularly given that it is entirely public money that is being invested by a public authority. The proposed FOI exemption provides blanket secrecy without any need to assess, let alone demonstrate, the commercial need for secrecy in relation to particular information and, therefore, it would have failed to strike the right balance had the government proceeded with that reform to industry superannuation funds.

The second point in the Senate inquiry that is of importance to this House is the removal of the Future Fund Management Agency from the Public Service Act. We recognise that there is some unique work done by staff at the FFMA that is different from most other Australian Public Service entities, and there are examples within other Public Service agencies where staff are employed under separate legislation. But there are existing issues with pay and conditions in the APS due to the Morrison-Joyce government's bargaining policy. As the CPSU has observed, it's a policy which has delivered real wage cuts, wage freezes, pay rise deferrals and caps to wages growth. All of these have impacted the capacity to recruit, to retain and to reward staff. That's what the CPSU has said about this government's wages policy. And, according to the government, they want to import the norms of the financial services industry into the future fund through this proposed change. But just what norms of the industry are they trying to incorporate into the future fund after what's been uncovered in the financial services industry over the course of the last decade, particularly through the banking and financial services royal commission?

Over eight long years, the coalition government has attacked the Public Service, imposing an artificial staffing cap and job cuts resulting in a significant decrease in the capability within the APS and an overreliance on consultants and contractors. We've all seen the ridiculous amounts of taxpayers' money that has been spent by this government on reports, on consultants and on contracting out the role that was previously played by well educated, well informed, experienced public servants who knew how the Public Service worked and, more importantly, ensured that the disbursement of public funds on work performed by the Public Service was done more efficiently and got better outcomes. So a more fundamental change to the way APS is governed is required to improve the conditions and setting for all staff in the APS, not just those that are proposed to move into the FFMA.

The final point I want to make is in respect of maximum disbursements from the Medical Research Future Fund. Legislating for a maximum of $650 million to be annually disbursed to the MRFF represents yet another broken promise from this government. When MRFF was first established and announced in the 2014-15 budget, the budget papers clearly stated a commitment to funding:

The MRFF will provide a sustained funding stream for medical research, with payments from the MRFF expected to reach around $1.0 billion per year from 2022-23.

But a 35 per cent reduction in the funding available for any purpose would have a significant impact, let alone in the field of medical research. Remember when this government came to office? Remember what the former Prime Minister Tony Abbott said in the lead-up to that election? No cuts to education, no cuts to the ABC and SBS, and no cuts to health. No cuts to health—that went out the window in their first budget in 2014. But, again, we see this government cutting funding and commitments made when it comes to health care in Australia, and, in this case, it's the Medical Research Future Fund, which provides a steady stream of income to ensure that researchers have the necessary public backing to do work that ultimately, hopefully—and very successfully in Australia, I might add—results in some of the greatest technological and medical advancements that save lives and improve the lives of many Australians.

You would have thought, after the couple of years that we've just been through with the coronavirus pandemic and just how well medical researchers throughout the world have responded to that pandemic in the development in record times of workable vaccines that have ensured not only lives have been saved but that economies can open up again—businesses can start trading, workers can go back to work and Australians and people throughout the world can resume their normal lives—the last thing that a government would be interested in doing would be cutting funding for medical research into the future. But, as the inquiry heard, it doesn't make sense to cap something and then have a more aggressive investment mandate to return more funds from your investments if you're not going to make the disbursements. The fact the Morrison-Joyce government is now proposing to have a maximum annual disbursement limit that is $350 million less than their initial promise—reiterated in 2017, I might add—represents a betrayal of the medical research community, it represents a broken promise to the Australian people and it represents yet again an opportunity lost for medical advancement in a country that has prided itself on some of the world's most innovative and groundbreaking research in medical science. It's yet another example of a broken promise from a government that is failing to deliver in so many areas. It has become tired and divided. It is no longer acting in the best interests of Australians but making decisions just to get through particular difficult periods. This two-week sitting of parliament is one of those difficult periods for it.

Angie Bell (Moncrieff, Liberal National Party) Share this | Link to this | Hansard source

I rise to speak on the Investment Funds Legislation Amendment Bill 2021. It effects a range of amendments to improve the operation of Australian government investment funds and enhances the ability of the Future Fund Board of Guardians and the Future Fund Management Agency, known as the FFMA, to continue investing for the benefit of future generations of Australians.

The Board of Guardians is responsible for deciding how to invest the assets of each fund. The board consists of a chair and five other members. Members are appointed by the responsible ministers, in accordance with legislation, and are selected for their expertise in investing in financial assets, managing investments and corporate governance. The board invests the assets of the Future Fund, the Medical Research Future Fund, the DisabilityCare Australia Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, the Future Drought Fund and the Emergency Response Fund—I thought it was important to break all this down, in speaking on this bill, for Australians who may be listening. They operate independently of government and tailor the management of each fund to its unique investment mandate.

For those who take an interest, the total funds currently under management are $245.8 billion, with $196.8 billion for the Future Fund, $22 billion for the Medical Research Future Fund, $2.2 billion for the Aboriginal and Torres Strait Islander Land and Sea Future Fund, $4.6 billion for the Future Drought Fund, $4.7 billion for the Emergency Response Fund and $15.5 billion for the DisabilityCare Australia Fund. All the funds have an absolute return objective, and the board keeps the investment objectives and focuses on growing and protecting Australia's capital in the long term. There's a diverse portfolio that is, as far as possible, robust to an uncertain future.

This bill provides: a new employment framework for the Future Fund Management Agency to remove staff from the Public Service and provide a more flexible, updated and appropriate employment model; a partial exemption under the Freedom of Information Act 1982—or the FOI Act, as it's known—for the Future Fund's investment activities; a new disbursements framework for the Medical Research Future Fund to bring greater certainty to funding; the transfer of administrative responsibility for expenditure from the Emergency Response Fund to the National Recovery and Resilience Agency; and a range of administrative amendments to improve the operation of the Medical Research Future Fund and the Emergency Response Fund.

The Future Fund was established under John Howard in 2006. Since then, it has grown by over $136 billion and the board has become responsible for managing five other Australian government investment funds. The Future Fund has a proven track record of managing investment portfolios on behalf of the government and maximising returns over the long-term. As of June 2021 it has delivered a return since inception of 8.4 per cent per annum, exceeding the target of 6.6 per cent—a good result for all Australians thus far and a promising trend for the future economic position of the Future Fund.

The bill makes important amendments to the employment framework for the FFMA to reflect its unique operating environment within global, financial and investment markets whilst still ensuring the agency remains subject to appropriate controls in line with community expectations. The new employment framework will enhance the Future Fund's independence further from government, improve its recruitment and retention of specialised staff, and allow it to continue maximising investment outcomes on behalf of the government.

The partial exemption under the Freedom of Information Act for documents relating to investment activities will provide an appropriate balance between maximising investment returns and ensuring appropriate transparency. The Future Fund regularly produces, negotiates and receives documents from third-party fund managers that include confidential, competitive and commercially sensitive information. The risk of disclosing highly sensitive commercial and proprietary material has led to investment managers withholding information or reducing their engagement with the fund. This presents an investment and governance risk. It can result in reduced access to investment opportunities and negatively affect investment outcomes. The exemption will provide certainty to the Future Fund and their investment partners that sensitive investment information is automatically excluded from release under FOI laws. The FOI Act will continue to apply to documents concerning the Future Fund's non-investment activities, and, in addition, the Future Fund will still publish details of its actual investments and will continue to be subject to parliamentary scrutiny. The removal of Future Fund Management Agency staff from the Public Service and the partial FOI exemption from the Future Fund's investment activities are consistent with arrangements in place for other government entities, including NBN Co, Australia Post and Export Finance Australia, that regularly deal with commercially sensitive information and require more market oriented employment practices.

These are sensible amendments that will improve the operation and performance of the Future Fund. Indeed, those on the other side should agree with these amendments, as their own finance minister in 2009 espoused these very changes. He spruiked that these amendments before the House:

… would aim to reinforce the independence of the board, but still provide values and standards for the agency, particularly with respect to its responsibilities relating to public money.

The new disbursements framework for the Medical Research Future Fund will provide certainty of funding to meet the government's 10-year investment plan and support significant disbursements over the long term to fund vital medical research and medical innovation projects. Under the current framework, disbursements from the MRFF are determined annually by the Future Fund's board. The board's calculation is largely based on the benchmark rate of return for the fund, which is linked to the RBA cash rate. This framework creates uncertain and volatile disbursements, which affects the orderly planning of grants programming from the fund.

With the fund now exceeding its target balance of $20 billion by over $2 billion, the government is implementing a new disbursements framework which will provide a fixed maximum annual disbursement of $650 million from 2022-23. This will allow investment returns above this level to accrue to the fund corpus, which can be accessed in later years when investment markets are more challenging. We can access it when we need it as a nation. That's very important for the future of our country. The reduction in distribution volatility will provide greater certainty of funding for the health and medical research sector and will allow the important commitments under the Medical Research Future Fund 10-year investment plan to be met. The amendments will also enable the government to issue a new investment mandate for the MRFF, with a higher and more suitable benchmark rate of return aligned to other risk-seeking funds managed by the Future Fund board, including the Future Drought Fund, the Emergency Response Fund and the Aboriginal and Torres Strait Islander Land and Sea Future Fund. A new investment mandate will increase expected earnings over the medium term and protect the level of disbursements over the long term, and this will help to fund vital medical research and medical innovation projects. I'm certain that most Australians would agree with these amendments.

The transfer of responsibility for the administration of expenditure from the Emergency Response Fund to the National Recovery and Resilience Agency implements the government's decision to establish the agency with a clear mandate to enhance national preparedness for and recovery from natural disasters. In response to the Royal Commission into National Natural Disaster Arrangements, the government announced in the 2021-22 budget the establishment by our Prime Minister of the National Recovery and Resilience Agency to help support local communities to respond to large-scale natural disasters and undertake new initiatives to manage the impact of future events and the changing climate. The agency is headed up by a coordinator-general, Shane Stone AC, QC, who is well placed, due to his vast experience, working as the former coordinator-general of the National Drought and North Queensland Flood Response and Recovery Agency following the devastating floods of January 2019 in my home state of Queensland. The agency and the fund will ensure that those impacted by natural disasters and drought have access to the support they need for their recovery, while delivering initiatives that reduce the risk and lessen the impact of future events on those communities.

The amendments to the Emergency Response Fund Act 2019 will ensure that the legislative and administrative processes are in place for payments from the Emergency Relief Fund to be administered by the National Recovery and Resilience Agency.

To finish, these amendments will strengthen Australia's financial position for all Australians and our nation's ability to respond quickly to whatever changes our future holds for us.

Debate interrupted.