Ged Kearney (Cooper, Australian Labor Party, Shadow Assistant Minister for Health and Ageing) Share this | Link to this | Hansard source

I rise to speak to the Investment Funds Legislation Amendment Bill 2021 and to support the amendment moved by the member for Whitlam. This bill makes several changes to the Future Fund and the investment funds that it manages. In summary, the bill would implement a new employment framework for staff of the Future Fund Management Agency, the agency that is responsible for the administration of the Future Fund. Staff of the agency would no longer be employed under the Public Service Act but would be directly employed under the Future Fund Act. The bill will make documents with respect to the Future Fund and Future Fund Management Agency's investment activities exempt from the operation of the Freedom of Information Act. It will implement a cap of $650 million as the annual maximum distribution allowed for the Medical Research Future Fund, along with other changes to the operation of the MRFF. It will shift administrative responsibility for the Emergency Response Fund from Home Affairs to the National Recovery and Resilience Agency, which follows the change to the Administrative Arrangements Order that shifted responsibility for emergency management from Home Affairs to the Prime Minister and Cabinet portfolio.

The staff of the Future Fund Management Agency are currently employed under the Public Service Act. This means that they are subject to the general employment framework that governs the Public Service. Schedule 1 of the bill will provide for a new employment framework for employees of the Future Fund Management Agency, where they would no longer be employed under the Public Service Act but, instead, be directly employed under the Future Fund Act. Labor recognises that the Future Fund Management Agency is a different kind of Public Service entity and that it operates in quite a unique employment market, similar to other Commonwealth entities such as the RBA and ASIC, which have arrangements to directly employ specialist staff. We note that this proposal is not a new one. Former Labor finance minister Lindsay Tanner, in a speech to the National Press Club in November 2009, said that the then government would be working with the Future Fund to examine options for the alternative employment framework, recognising the unique nature of the agency. However, Labor also notes that the Morrison-Joyce government has engaged in eight years of diminishing the capability of the Australian Public Service, including through its arbitrary staffing cap policy, resource and staffing cuts and a growing and wasteful overreliance on private consulting firms, contractors and labour hire to perform core public sector work. This is privatisation of the APS by stealth.

It tells you something about the employment and bargaining framework that this government has presided over that you have to staff out of the Public Service Act in order to retain high-quality staff and provide them with requisite pay and conditions.

The Australian Public Service and the wider public sector have a crucial role to play in serving our community and shaping the future of our nation. However, years of cuts and outsourcing have undermined the capacity and capability of the Public Service.

Labor is committed to building a stronger Public Service that delivers better outcomes for the community, contributes to building a fairer and more inclusive Australia and is a better place to work. Labor recognises the essential role of the APS in designing and delivering services for the public good and in developing policy solutions to the challenges the nation faces, both now and into the future.

With respect to the FOI exemption, schedule 2 of the bill will exempt documents relating to the investment activities of the Future Fund Board of Guardians and the Future Fund Management Agency from the operation of the Freedom of Information Act. It would mean it would join the list of similar exemptions for documents in respect of the commercial activities of entities such as the Attorney-General's Department, Australia Post, the CSIRO, the National Housing Finance and Investment Corporation, and NBN Co. Again, like the proposed changes to the employment framework, the proposal is not new. Former Minister Lindsay Tanner, in that very same speech in 2009, said that Future Fund board documents in respect of acquiring, realising or managing investment by the Future Fund board would be provided with the exemption under the FOI Act. Former Minister Tanner said that this was on the basis that 'the Future Fund is of the view that some of its information which if made publicly available would place at risk the return that could be earned for the funds or limit the range of investments the board can access.' The possibility of disclosure of sensitive information under the FOI Act has created some uncertainty for other entities entering into arrangements with the Future Fund.

We understand that the rationale for the change that is before us today is still the same. Labor understands the importance of ensuring particular documentation relating to commercial activities has a requisite degree of protection. However, the government's track record on transparency and freedom of information in the last eight years it has been in office is not something that should fill anyone with hope. The Morrison government has systematically abused Australia's freedom of information laws and has resorted to repeatedly breaking the law to hide from the Australian public information they have a right to know. They abuse claims for cabinet confidentiality, unlawfully claim documents in a minister's office cease to exist when they switch roles and make sweeping claims for exemptions totally at odds with the spirit and letter of FOI laws. They deliberately starve the Office of the Australian Information Commissioner of funding and resources, exacerbating delays in releasing information that they're forced to make public. A recent report found that 41 per cent of requests for non-personal information were refused outright in 2019-20, and just 26 per cent were granted in full. This is a government addicted to secrecy. Notwithstanding all this, we do recognise that a balance needs to be struck between transparency that is in the public interest and the protection of commercially sensitive information that is important to the operation of the Future Fund.

With respect to the Medical Research Future Fund, schedule 3 of the bill makes a series of changes to the administration, and the most significant change is the proposal to implement a maximum annual distribution of $650 million from the MRFF from 2022-23. This amount will be set in legislation, but it will be open for the Treasurer and Minister for Finance to set another amount by disallowable instrument, and the legislated amount will be subject to a five-yearly review. A key point to make about this amount is that it represents yet another broken promise from the government. In fact, it's one of those occasions where it's a broken promise built upon another broken promise. We all remember that on the eve of the 2013 election the opposition leader, Tony Abbott, promised a number of things, including that there would be no cuts to health.

But what did we get? Cuts and cuts. And now we are seeing cuts to the Medical Research Future Fund.

Of course, the government isn't spending the whole $20 billion it has in the fund. In the five financial years from 2016-17 since money has gone out of the fund, a total of $1.2 billion to 30 June has been spent on medical research. Australians know now more than ever the benefits of medical research, and so does Labor. The government's response is not to deliver on the initial promise to the MRFF, the medical research community and all Australians. We heard at the Senate inquiry the consequences of locking in this broken promise, and Labor will not support that.

There are other changes that are proposed for the MRFF in this bill which we do support, however: allowing for the direct transfer of funding from the MRFF to states and territories; and extending the duration of the Australian Medical Research and Innovation Strategy and Australian Medical Research and Innovation Priorities, which are used to assist the health minister in deciding how financial assistance from the fund is provided. We support allowing for grants to be provided by instalments.

With respect to the Emergency Response Fund, Labor hopes that the transfer of responsibility of the ERF to the newly established National Recovery and Resilience Agency will finally see some funding get out to communities that need it. For most of its existence since it was formed, in December 2019, this $4 billion fund has been earning the government hundreds of millions of dollars in interest. It finally spent $50 million in the last financial year, however its net earnings as of 30 June this year far exceed what has gone out: $726 million in net earnings versus $50 million spent. I support the amendments made by the member for Whitlam to this bill.

James Stevens (Sturt, Liberal Party) Share this | Link to this | Hansard source

I rise to support the second reading of the Investment Funds Legislation Amendment Bill 2021, though not the amendment being moved by the opposition. Of course, this bill does a range of important administrative things for the operation of the Future Fund. To begin with, I comment on how lucky we are to have the Future Fund and what an amazing legacy it is of the Howard government, and particularly then Treasurer Peter Costello, who, quite fittingly, now chairs the Future Fund Board of Guardians.

The Future Fund has just shy of $250 billion funds under management, with $200 billion of that in the Future Fund structure initially envisaged back in 2006. Of course, at that time, after many surplus budgets delivered by Treasurer Costello, the debt left to the Howard government by the previous Labor administration was paid down. Future surpluses, coupled with the final stages of the privatisation of Telstra, allowed for the creation of a Future Fund which was in particular necessary given the unfunded liability that was in existence because of future Commonwealth Public Service superannuation payments that were not provisioned for as a balance sheet item by the Commonwealth government prior to that. Those future liabilities were going to continue to put pressure on the budget if a decision like creating a future fund to cover those liabilities was not taken.

Now we're in a position where we have, as I say, nearly $250 billion in total, but the component that's there to help support the liability of Commonwealth Public Service superannuation—those prior to the scheme we have now, of course. We don't have the defined benefit schemes anymore, except of course in defence and some of the judiciary et cetera. In the general Commonwealth Public Service there are not those schemes that used to be in existence before the introduction of compulsory superannuation. The workforce going forward provides for its own superannuation, through each Commonwealth public servant receiving their superannuation payment from us as a government, which we are required to do like any employer is required to do in this nation. There is the legacy of the entitlements that are fairly owed to people who are on those old defined benefit schemes, and the first responsibility and priority of the Future Fund is to provide for that.

The $200 billion we've got to provide for that future liability is something very reassuring. It reminds us of the fiscal challenges we've had over the last 20 months or so, and of the important and necessary decisions to borrow money to invest in our economy and in supporting businesses and individuals because of the challenges of meeting the COVID pandemic health response and economic impacts. It's a great relief to have the legacy of decisions like the creation of the Future Fund back in 2006. That $200 billion is an enormous amount of money we have because of those decisions. Think of where we'd be if we didn't have that money provisioned and we had those unfunded liabilities still in place. We would be having a whole different set of policy debates and discussions in this place right now because we would have to be figuring out a conventional fiscal solution to those liabilities, which would clearly put an enormous amount of pressure on the budget. So we're in a good position there.

I commend the Future Fund on their investment performance over the years. I think their average long-term return is sitting at 8.8 per cent. Their objective is about 6.6 per cent, so they're continuously exceeding that each and every year. That of course means the size of that pie continues to grow. Not only can it provide for what it was initially intended to; as its investment performance is more successful than its targets, that opens up new opportunities for investing in other worthy future interests of our government. The Medical Research Future Fund, which sits within the Future Fund's management responsibilities, is a good example of the sort of thing—if or when in the future we are in a position to look at the successful, greater-than-expected growth of the Future Fund and think about where we can invest surplus funds we might generate through the Future Fund. It is an enormous opportunity to consider things like medical research through that process.

This bill takes on two important changes. I was surprised that the member for Cooper made the point—I was surprised when I read it as well—that it was former finance minister Lindsay Tanner who first foreshadowed these sorts of reforms, more than 10 years ago. We have both been in government over that time, so, frankly, there's not much benefit in political pointscoring and arguing about why it is, having foreshadowed the need for this more than 10 years ago, that we're getting to it now. But I'm pleased we're getting to it now. I'm optimistic and hopeful that the bill will get the support of the House, move through and come into effect—particularly the two significant changes that I'm briefly going to comment on.

The first change is the exemptions under the FOI Act. I think it's pretty obvious why the Future Fund would not want to have to comply with the FOI Act, like every other agency needs to. The Future Fund would be spending a lot of money on very valuable advice—on investment decision-making, business cases et cetera, that any prudent funds management company would undertake. That, I suspect, would be worth millions and millions of dollars every year. Commissioning that sort of advice and paying for it is in our interest—we are the ultimate beneficiaries of the Future Fund when they spend that money—as it is that they are the only beneficiary of that advice they commission. You could foresee circumstances where, if they don't have these exemptions from the FOI Act and they are put in a position where they are legally required to release information—that could be millions and millions of dollars of private investment advice they have commissioned and paid for. It fairly belongs to them, and it shouldn't be something that someone else—a potential competitor investor, for example—can get access to at no cost because of the technicality that the Future Fund has to comply with the FOI Act. I think we would all find that regrettable. I think we can all agree that, if the Future Fund pay fairly for certain information using the money we have provisioned—all of us as taxpayers, as beneficiaries, as Australian citizens—that should belong to them.

They shouldn't, in any circumstance, be compelled because of an FOI determination to have to release that advice.

I also understand that the Future Fund have raised issues where they might not have been provided full information from other parties that they engaged in investment discussions and other pertinent discussions as to how to manage their funds, because there is a fear that information turned over to the Future Fund by other parties, independent of any obligation under the FOI Act, would then potentially see the information that they have provided to the Future Fund revealed in the public domain through the FOI Act process. Again, this is all very sensible commercial-in-confidence information, that we can all agree should be protected. We don't want the Future Fund in any way, shape or form to not be able to achieve and pursue the best investments possible that they believe will achieve the investment profile that they, as a board of governors, determine, or that they are in any way limited in the avenues that they can pursue to put the funds that they have custody over in the best possible place to get a strong and safe return for the people of Australia.

So this certainly seems a commendable change, that we remove the risk of them having to turn over information that any other business that is operating any comparable funds management firm would never have to do, because they themselves are not subject to the FOI Act. I stress that of course there are still an enormous number of safeguards—governance safeguards, probity safeguards—in place in overseeing the operations of the Future Fund. This is a sensible change. It means that they won't have that risk with information that shouldn't be in the public domain or accessible to competitors et cetera, and that should remain as commercial in confidence. I think we can all agree that that is a sensible and necessary suggestion, first raised by then Labor minister Lindsay Tanner more than one decade ago.

The second substantial part of this legislation is moving the employees of the Future Fund Management Agency from being members of the Australian Public Service into their own defined employment category within the Future Fund. I think we can all understand the sense in this. Again, it was proposed by then finance minister Tanner 10 years ago. You can imagine that the Future Fund would want to structure the way in which they employ their staff, the way in which they remunerate their staff and the way in which they attract talent. They have to meet the standards of the industry that they are operating in. They have to be able to compete, through the conditions and remuneration et cetera that they have to be able to offer, to get the best people. They have to compete with the standards of organisations similar to them to employ the very best people. So we should empower them to be able to operate in that free environment and not be constrained by the structures of the Australian Public Service around these things.

It's been noted already in these debates that there are other Commonwealth agencies that have the same set of circumstances in place for exactly the same reasons. They have to be able to compete for the best staff possible in an environment where there are other competitors that are structured very differently in the way in which they employ people, compared to some of the rules around the Australian Public Service. So I think that's a very commendable objective as well, and it's something that we should support so that we can make sure the people who are managing this $250 billion of our money—that we are lucky to have—are the best people to be in charge of the custody of that. That is not to say that the people at the Future Fund we already have are not the best people—they are, of course. They are performing exceptionally well, and I have outlined the success of the performance of the investment returns of the fund since it's creation. But we clearly need to make sure, looking forward, that they have the most flexibility that we can provide them to employ the best people. We want the best people looking after that amount of money.

I should have looked this up before this debate to find a more recent statistic, so I won't test my memory and guess, but certainly the Future Fund, as a sovereign fund, is on a per capita basis one of the most impressive in the world. In fact, putting aside per capita, it's also one of the largest in the world, and we should be very proud of that. Coupled with the enormous value of the funds under management in the superannuation system on top of that, we are very well provisioned in this country for the future. The Future Fund is a vital part of that, as I've outlined. Those funds are there to support the defined benefits scheme entitlements that Commonwealth public servants are validly entitled to, and they should have confidence that the government is never going to struggle to meet those commitments.

We are lucky to have this endowment. We are lucky that it is of the size that it is and is being managed as well as it is. We wish it that same success into the future, but in order to secure that we should always look for ways and respond to opportunities to make changes to the statute instruments that its managers operate under so that they can go out and perform to the best of their ability, which is to the benefit of all of the people of Australia. I commend the bill to the House.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

I'd like to speak to the amendment relating to schedule 4, the Emergency Response Fund. I have had years of experiencing disasters. Having lived in the Blue Mountains for more than 30 years, I've experienced the fires, including the bushfire that took my own home in 2013. But let's go six years forward from my experience in 2013 to the Gospers Mountain fire in 2019. It was a longer fire. It destroyed more habitat, although fewer homes were lost. I have to say it affected far more people. More people were threatened, had near misses and endured extraordinary conditions, and the fire responders faced things they had never thought they'd see, ever. There are people only now realising the mental toll that it has taken, along with the cumulative effects of floods and COVID.

In between those two bushfire events was the creation of the Emergency Response Fund. I spoke in this place and welcomed the creation of that fund. But, two years on, the only thing that's happened is that the fund has got fatter. A small amount of money has been committed, but only a measly $50 million has actually gone out the door. The interest earned has been around $725 million, so the fund is sitting there getting bigger while the work that should be done to help prepare for the next fire, flood or other natural disaster simply isn't happening.

Now we know that there's a round of funding opening up in just a few days time, with the applications closing in early January, on 6 January. Community groups are expected to be able to whip up a proposal to spend $20,000 to $10 million in that time. I think what puzzles me most is that the Hawkesbury, the home of the Gospers Mountain fire, is not being given priority points for bushfire but only for flood. Under this funding coming from the Emergency Response Fund, only projects targeting flood will get priority. Without the bonus points in this competitive round, it's hard to see what fire preparation projects or strategies might be successful. The timing of this grant round is appalling. It's at a time when people want to relax with family and friends as we head towards Christmas. What you really have to wonder about with the timing is when the announcements of the successful projects will be made. No doubt they will be perfectly timed to suit a Morrison election campaign. The Morrison government is good at announcement, but as we've seen to date with the Emergency Response Fund—which is one of the subjects of this bill, the Investment Funds Legislation Amendment Bill 2021—their report card gives them an A for announcement and a D for delivery.

When I asked community members who were deeply involved in the fires and floods that we've had in the last two years about what fundamental changes there have been that would make something similar much easier to bear, there is a fairly unanimous shrug of the shoulders and a shake of the head. In fact, the last couple of weeks have been ones of intense anxiety for people who live on the river as they watch the Hawkesbury water rise from the Warragamba spilling.

There is no sense of urgency from this government about the Emergency Response Fund, nor from the New South Wales government in terms of making changes to laws so water can be better managed at Warragamba Dam. That is causing enormous anxiety, as are all the other things this fund could have been used for.

The Bells Line of Road is easily cut during heavy rain. The bridges go under. We could still easily find ourselves loading boxes of carrots into helicopters to get across the river should we see something similar to the floods that we had in March this year. Greens Road at Lower Portland remains unrepaired. People cannot get through. They are still travelling a dangerous dirt road. The Upper Colo Bridge is a long way from being replaced. Cornwallis has barely been looked at, and the riverbanks still have great big holes in them.

It is no clearer to me or others what has being done to improve the evacuation routes out of the Hawkesbury or what has been done to ensure that people know where the evacuation centres are. This fund could have done that. If there is a fire, the same thing applies. It's not clear to anyone that when the RFS rightly says to people in Upper Colo or Colo Heights, 'Now is the time to leave, and you should head to Wilberforce,' there is anywhere to go in Wilberforce that would be a safer place. In fact, there are no additional safer places in either the Blue Mountains or the Hawkesbury other than things that have been done through the efforts of local communities to upgrade their locally run facilities. These are the things that this fund could have done, but it has failed to do that. Nor do we have improved mobile coverage or good NBN.

The government did nothing to prepare for the 2019 Black Summer bushfires despite warnings. Once again, we are in another disaster season with nothing built, no jobs created and our communities no better protected. I know this Prime Minister doesn't hold a hose, but he should be doing everything possible to help my community hold that hose and fight the next fire or be ready to fight and deal with the inevitable next flood. This is the lost opportunity of the Emergency Response Fund to which this bill refers.

I want to take a moment to go into a little bit more detail about what residents at Greens Road in Lower Portland are experiencing. This is a road that was wiped out, let me remind you, eight months ago. Eight months ago, the floods took sections of this road. In that time, Hawkesbury Council and the state government have been unable to deliver any sort of temporary solution for people to keep the road open. All they have is plans. They open the road for a moment, and then they close it when there is 10 millimetres of rain. Of course, we have had weeks of rain now, and residents are profoundly affected by that. We have people living in this area in Lower Portland who are still trying to do repairs to homes that were damaged during the March floods, and yet here we are. They are unable to do those repairs. This is emblematic of the failure of every level of government to recognise the urgency that my community feels in getting action.

One might say that this is the responsibility of council and state government, yet the funding comes from this place. The funding comes through the things that we agree to. This parliament cannot ignore its responsibilities. When you are in government, you have a responsibility to ensure that the funds you allocate are properly spent and spent in a timely way. So I would urge the Morrison government not to step away from its responsibilities and say, 'There's the cash; over to you.' I urge them to step up and work with the New South Wales government and demand that the Hawkesbury City Council speed up the process so that people can get back onto their road and have a way to get to their homes safely without causing even more trauma and anxiety for their families.

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

I am going to continue my speech from a few days ago and outline a few key points around this amendment. The Investment Funds Legislation Amendment Bill 2021 gives rise to a range of regulatory impacts on businesses, as set out in the PJCCFS and ALRC reports. The PJCCFS and ALRC reports have been certified as independent reviews which involved process and analysis equivalent to a regulation impact statement.

To address the gap in PJCCFS and the ALRC inquiries and the government's consideration of options for class action and litigation funding reform, supplementary analysis on the costs, benefits and risks associated with the new measures was prepared consistent with the Australian Government Guide to Regulatory Impact Analysis.

A number of key impacts were identified. Litigation funders will experience greater barriers to charging unfair and disproportionate fees and commissions in class actions, reducing the availability of windfall profitmaking. Litigation funders may be incentivised to undertake greater book building to inform their decision to support a class action, which entails identifying, communicating with and enrolling class members to the action. Litigation funders will gain certainty and clarity about court powers to intervene in litigation funding agreements and how courts will assess a proposed distribution of claim proceeds under a class-action-litigation funding scheme.

Litigation funders may experience greater uncertainty about the enforceability of some litigation funding agreements and their returns in class action proceedings, although this uncertainty is likely to abate over time with the development of precedent. Litigation funders may also experience a reduced funding appetite, especially in respect of cases in which they would previously have received a windfall return. Litigation funders may be subject to additional administrative and compliance costs to comply with the new regulatory requirements.

The government is ensuring fair and reasonable compensation for class action claimants and appropriate regulation of litigation funders and lawyers. It is crucial that Australia's class action system and litigation funding regime be conducted with impartiality and fairness so as to provide equitable outcomes for all Australians.

The reforms respond to a range of recommendations by the Parliamentary Joint Committee on Corporations and Financial Services and the Australian Law Reform Commission in their respective inquiries into litigation funding and class actions. The government introduced these measures because action was needed to address what the joint committee found was systemic and inappropriate skewing of proceeds away from class members to litigation funders.

The Morrison government—our government—is taking action to ensure that if you participate in a class action case your benefit and outcome is beneficial directly to you, as it should be. Individuals participating in class actions are seeing more than 50 per cent of compensation awarded by Australia's judicial system go directly into the wallet of lawyers and litigation funders before claimants see a cent. I don't think that's right. That's why the government has acted in this way. There are five key elements to the reforms in the bill: enhanced protection of the right of class action plaintiffs to choose whether to join a class action litigation funding scheme, a type of managed investment scheme under the Corporations Act 2001; court powers to approve or vary the distribution of the proceeds of the funded class action to ensure it is fair and reasonable; a rebuttable presumption that a distribution of over 30 per cent in total of the proceeds of the scheme to nonmembers of the scheme is not fair and reasonable; a requirement for courts to consider the advice of certain independent experts, if any are appointed, to assist in determining the fairness and reasonableness of a proposed distribution; and disincentives to funders from seeking common fund orders to extend their commissions to nonmembers. Together the changes form a comprehensive package of reforms to promote a fair and reasonable distribution of class action proceeds to claimants who are member of a class action litigation funding scheme. They also continue the government's work to enhance oversight of the litigation funding industry, and I commend the committee on its work.

I will finish with a short summary and go back to where I started on the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 and speak to the House on how it began. On 28 October 2021, the House referred an inquiry into the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 to the Parliamentary Joint Committee on Corporations and Financial Services, of which I am a government member. Just a little bit about class actions: they enable a representative plaintiff—

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

Order. The member for Moncrieff will resume her seat. I've just been advised that the member for Moncrieff should have sought leave to speak a second time because it is not immediately after she was interrupted yesterday. Is leave granted?

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

I'm happy to grant leave but I believe the member is speaking about the wrong bill at the moment. I believe that we're debating a different bill.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The Investment Funds Legislation Amendment Bill 2021?

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

Yes, that's right. Is that the bill the member is referring to? I'm happy for her to speak on this, but listening to the speech it appears it is about a different bill.

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

I was in continuance of the last speech that I came to the House with. My understanding is that that was the Investment Funds Legislation Amendment Bill 2021. Madam Deputy Speaker, I had actually completed my speech.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

Thank you, Member for Moncrieff. I call the member for Indi.

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

The Investment Funds Legislation Amendment Bill 2021 contains four different parts which all deal with very different things. Firstly, I have really strong concerns about schedule 2 and I would like to see that schedule struck completely from this bill. Schedule 2 allows the Future Fund, Australia's publicly owned sovereign wealth fund, to operate with an unnecessary level of secrecy. I oppose this part of the bill, and I urge and expect the Senate will remove it from the bill.

The second part of this bill makes changes to the Medical Research Future Fund, which puts money into medical research in Australia. The bill sets a limit of $650 million a year on how much that fund can invest in medical research in any given year. I spent 12 years working in the Department of Rural Health at Melbourne Medical School. Through that experience of my research in rural Australia, I think it's a real shame that the government is legislating such a low limit on how much we can invest in our health. There are other very eminent medical researchers in this House—there's one sitting over there. It's an expensive business and it's an important business, and I am really disappointed that this bill is legislating for such a small amount when there's such a great need. In particular, there's a great need in rural and regional Australia, where the comorbidities of chronic disease and people's health outcomes are so much worse than other parts of more populated metropolitan Australia. There's a lot of work to be done there and I think the government is being a bit lousy on that.

The government had originally envisaged that this fund would spend $1 billion per year. Instead, this bill is drastically cutting that amount. The reality is even worse. The government's own policy is to spend an average of just $500 million a year on medical research over the next decade, which is half of what was proposed. That's really not good enough. Less money going into medical research means poorer health outcomes for Australians.

As I said, regional Australians are particularly disadvantaged by this; we have such a great burden of disease that really needs addressing. We need to get our fundamental research in place in order to address the structural reasons for this and, indeed, some of the other key components that have been longstanding in rural health. And yet when I look at the projects that the Medical Research Future Fund has invested in I see that this particular need in rural and regional Australia has simply not been addressed in any substantive way. Only eight per cent of research funding is going into regional health research in Australia, yet regional Australia has 20 per cent of the population of this nation and a much greater burden of disease than any other population. Eight per cent of the funding is absolutely not good enough. Rural and regional health professionals and researchers have been calling for a better deal for a long, long time.

Another part of this bill relates to bushfires. Schedule 4 makes administrative changes to the Emergency Response Fund, making it easier for the Minister for Emergency Management and National Recovery and Resilience to access and distribute money from the fund. As an MP from a region that was heavily impacted by the Black Summer bushfires and as someone who has closely scrutinised the government's bushfire response to make sure it is done effectively and fairly, I want to address these provisions directly.

The $4 billion Emergency Response Fund, or ERF, was set up in September 2019 by an act of parliament. The point of the ERF is to finance emergency response and recovery following natural disasters in Australia that have a significant or catastrophic effect. Under the original legislation, the government can spend up to $200 million a year from the fund—$150 million for emergency response and recovery and $50 million for resilience measures. The ERF can only be accessed when the government determines there is a need for additional support following a natural disaster. Any spending from the fund requires formal government approval and, under the ERF, the Minister for Emergency Management and National Recovery and Resilience has broad discretion over how the funds are allocated. Under the initial legislation, it was Emergency Management Australia that held administrative responsibility for expenditure of the fund. However, this legislation transfers that responsibility to the newly established National Recovery and Resilience Agency.

On a pure policy level, these changes make sense, and I support this part of the bill. But, in doing so, I must register my concern at the way the government has politicised and continues to politicise bushfire recovery spending. This bill makes it easier for the minister of emergency management to oversee the distribution of enormous sums of public money for national disaster recovery. Of course, we do that while this nation is still without a federal integrity commission that might provide reassurance to the public about the integrity of government grant schemes, particularly when there is so much oversight by the minister. So it's essential to consider the government's record on this issue to assess whether the legislation involves appropriate safeguards to prevent misappropriation or, indeed, abuse of any funds.

From day dot, I've had serious concerns about how the government has allocated bushfire recovery funding. I have raised public concerns: firstly, that the funding was delivered too slowly; and, secondly, that funds earmarked for bushfire recovery were used to fund projects hundreds of kilometres away from where the bushfires actually were and that some bushfire recovery schemes simply excluded areas that had been affected by fire.

Recently I raised concerns about a massive new bushfire recovery program that is directly relevant to this legislation. Since it was established, the NRRA has introduced two grant programs—the Black Summer Bushfire Recovery Grants and the Preparing Australia Program. With the Black Summer grants, there is $280 million available, but there are some serious problems with the program. First, any local government area that the government declares was affected by Black Summer fires is eligible for funding. But the list it has provided includes some locations which were kilometres away, so far distant from the nearest fire. The government has given no explanation for how it came up with this list of eligible locations. There seems to be no safeguard against pork-barrelling the whole pot of money.

Consider this: the locations that are eligible for grant funding have been put into two groups. The most affected places, called category 1, have a funding envelope of $4.5 million. The less affected places, category 2, have a funding envelope of $1.6 million. So, in theory, a heavily affected locality, like the Alpine Shire in my electorate, should receive around $4.5 million and a less affected one, like Wangaratta, should receive around $1.6 million—except that is not how it actually works. If you read the guidelines closely, those funding envelopes aren't actually real. Anyone in either category 1 or category 2 locations can apply for a grant of up to $10 million, which is more than double the total funding envelope for the most affected places. If the government decides that a category 1 location, like Towong or East Gippsland, in the member for Gippsland's electorate, or Bega, in the member for Eden-Monaro's electorate, didn't put forward an application of sufficient quality, it will simply redirect some of its funding to less affected locations. There appear to be no safeguards in the guidelines to make sure that this funding, a quarter of a billion dollars, actually goes to places that were most affected by bushfires—none at all.

We could see a project in Brisbane win $10 million while the entire Upper Murray community misses out. It's possible.

Even the way the government has classified places as category 1 or 2 is completely opaque and lacks any logic. The Alpine resorts of Mount Hotham, Mount Buller and Falls Creek are classified in the guidelines as category 2, meaning they were only lightly impacted by the fires and are earmarked for less funding. But anyone who knows our area knows that the fires got within metres of Dinner Plain and nearly wiped out the Mount Hotham Airport. Both Mount Buller and Falls Creek had fires come within a few kilometres, were drenched in smoke for months and lost the entire summer tourist trade. Indeed, all three resorts are entirely contained within the Alpine and Mansfield local government areas, both of which were classified as category 1 and earmarked for more funding.

I also have concerns about the second grant program announced by the NRRA, the Preparing Australia Program. This program will award grants of up to $10 million to help communities build their resilience to natural hazards like bushfires, floods and tropical cyclones. The program has $150 million available over the next three years. Once again, this program has a list of priority locations which will get first dibs on funding. The priority list includes cities like Geelong, Hobart and the Sunshine Coast, but Towong in my electorate was left off the list. Towong Shire was absolutely slammed by the Black Summer bushfires. Forty per cent of the area was burned. One-third of all farming land was burned. Thousands of livestock animals were lost. I saw that the government has also excluded four heavily affected LGAs across the Murray. I am calling for Towong Shire to be added to the government's priority list for the Preparing Australia Program. After everything that community went through, I don't want to see them miss out on disaster preparedness funding. Preparedness is one of their key concerns. We don't want to be in this situation again.

I would also like to raise my deep concern about the timing of the grants. The government announced just weeks ago that it would open applications for the Preparing Australia grants on 10 December and close them on 6 January. It is, frankly, pretty ridiculous. Who is expected to be putting in a $10 million grant application in a three-week window over Christmas and the New Year? I'm calling on the government to extend the deadline for these grants to give our communities a real chance to get in their applications. These concerns are highly relevant to this legislation because the bill before us gives considerable authority to the NRRA, the body that the government has entrusted with this grant scheme. I'm not the only one who has concerns about bushfire spending. The member for Gippsland, until recently a cabinet minister, said that the flawed design of the Black Summer scheme will 'rip off' his community. He said:

The Canberra bureaucracy and the Ministers responsible have clearly made a mistake and rather than stubbornly plough on and make it worse, they should increase the allocation to East Gippsland and any other Shire that was actually burnt.

His position was backed up by the state MP Tim Bull and local mayor Mendy Urie. I back the member for Gippsland on this and request that, if we are to give the NRRA and the minister more powers over bushfire spending, the NRRA listen. It must listen more closely to the bushfire affected communities.

I'm extremely pleased that the Coordinator-General of the NRRA, Shane Stone, has accepted my invitation to come to Indi to meet with me this Saturday morning in my Wodonga office. During the agency's former iteration as the National Bushfire Recovery Agency, I was able to enjoy a very positive working relationship with that agency's leaders, holding several tours of bushfire affected parts of Indi to hear directly about the concerns people have. These tours proved crucial in communicating to government our community's needs in the immediate recovery, and it will be crucial this time for the government's understanding of our needs for building longer term resilience. After meeting with Mr Stone this Saturday, I will be heading straight up to the Murray Valley and the Upper Murray to meet with bushfire affected communities around Corryong. I really hope that Mr Stone can join me on one of these trips in the very near future.

Australians are smart enough to judge the government not just by their words but by their deeds, and in their deeds we've seen a disturbing willingness to use public money to advance political objectives. It's reasonable to raise these concerns because the government has shown since the Black Summer fires that it is willing to politicise bushfire recovery funding, and we simply can't have that.

When we look at legislation like this it makes it easier for the minister and the NRRA to make decisions about allocating funding, so we are right to ask questions about that.

If we are to give the NRRA more powers with this bill to spend public money on an issue as important as bushfire recovery, I'm calling on them now to show greater transparency about their decision-making and to show a greater commitment to bringing funding where it is actually needed.

Trevor Evans (Brisbane, Liberal Party, Assistant Minister for Waste Reduction and Environmental Management) Share this | Link to this | Hansard source

I would like to thank all members who have contributed to the debate on the Investment Funds Legislation Amendment Bill 2021. This bill will enhance the ability of the Future Fund Board of Guardians and the Future Fund Management Agency to continue investing for the benefit of future generations of Australians.

The bill puts in place a new employment framework that will reinforce the board's independence from government and provide more operational flexibility to allow the agency to recruit and retain key investment management staff from around the globe. It will also help establish staff and remuneration structures that better align with norms in the financial industry.

The bill ensures that appropriate governance, accountability and transparency measures remain in place. Providing a partial exemption under the Freedom of Information Act 1982 for the board and the agency will reduce the risk of disclosing confidential, competitive and commercially sensitive material to the detriment of investment performance and industry relationships. It aligns the treatment of the Future Fund board and the agency under the FOI Act with that of other entities that deal regularly with commercial information, such as NBN Co and Export Finance Australia.

The new disbursements framework for the Medical Research Future Fund will provide greater certainty to assist in the forward planning of grants programs and allow the important commitments under the Medical Research Future Fund 10-year investment plan to be met. It will also isolate the level of disbursements from financial market fluctuations while supporting the perpetual funding objective of the MRFF.

Once these changes are implemented, the government will issue a new investment mandate with a view to increasing target earnings over the medium term and protecting the funds balance over the long term. The bill will also transfer responsibility for expenditure from the Emergency Response Fund to the newly established National Recovery and Resilience Agency, and streamline administrative arrangements for transfers from the Emergency Response Fund Special Account.

Once again, I thank all members for their contributions. I commend the bill to the House.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Whitlam has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be disagreed to.

Question agreed to.

Original question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.