Ruth Webber (WA, Australian Labor Party) Share this | Hansard source

Before I commence the substance of my remarks on the Future Fund Bill 2005, I would like to take a moment to thank my fellow members of the Senate Economics Legislation Committee and the secretariat of that committee. As fellow senators may be aware, the hearings into the Future Fund Bill were held at the same time that the chamber was considering the private member’s bill dealing with RU486. It makes organising representation in both places a little difficult, when one is facing a conscience vote. I particularly want to place on record my thanks to my colleague Senator Stephens for carrying the lion’s share of the workload in that hearing. I would also like to thank the other members of that committee and the secretariat for their forbearance because, when I did manage to get to the hearing halfway through their second day of evidence, I got a crash course on the proposal before us and how the government plans to administer it, and what outside groups think will be the outcome of that. It is important to place on the record their forbearance and tolerance in allowing me to learn a bit more about people’s views.

As Senator Stephens has said, and Senator Sherry before her, Labor’s major problem with the Future Fund Bill is that the government’s arrangements do not actually meet the government’s 2005 budget commitment. That commitment was, as has been said, that the Future Fund would be managed by an independent statutory board and that the board would be free to set the investment strategy and the strategic asset allocation of the fund. Indeed, while I was at the hearings, that was the main focus of our discussion. Despite having been through that crash course at the economics committee hearings, the Labor members of that committee were not convinced that there was evidence to say that the legislation actually meets the government’s commitment. Hence our additional comments to the committee’s report, which were basically that the Labor Party is of the view that the government’s arrangements for the Future Fund do not meet the 2005 budget commitment that the fund would be managed by an independent statutory board and that the board would be free to set the investment strategy and the strategic asset allocation of the fund, as I have said.

Labor’s concern also is that the Board of Guardians does not have the same legal protections that are afforded to Commonwealth superannuation boards. In addition, the power to direct the board is general in the legislation and goes beyond maximising long-term returns and extends to—and I quote from the bill—‘such other matters as the responsible ministers consider relevant’. This exposes the fund to a higher level of ministerial interference than would be the case if the board’s functions were limited to maximising the return on the fund across a balanced investment portfolio. This legislation, as it currently stands, empowers the ministers concerned to dismiss board members for ‘inadequate performance’. This extraordinary broad and ill-defined power adds to the risk of undue political interference in investment decisions of the fund.

What we have seen, as always with the government, is that their rhetoric in the 2005 budget statement, the rhetoric of the sell of the proposal of the Future Fund, does not meet the reality of delivery when we see the fine print of the legislation. I remind senators that our additional concerns were particularly around the role of the Board of Guardians and the fact that they do not have the same legal protections afforded to those serving on Commonwealth superannuation boards. They are at the beck and call of the political whim of the two ministers concerned. Indeed, to see this you only have to consider clause 18(2) of the bill, which says that the powers of the minister include—and I will say yet again—‘such other matters as the responsible ministers consider relevant’, which is a pretty broadly and ill-defined term.

So much for the independence of the board of the Future Fund. It is, indeed, open to political direction. You cannot go much further along the road to undermine independence as to include a provision in a piece of legislation that covers all other matters that the relevant ministers consider relevant—it is a pretty sweeping statement. Where does that begin or end? How far can the ministers go in forcing the board to consider such other matters as they consider relevant? It is this kind of open-ended provision within the legislation that allows for the worst kind of interference, not the locked box that we were seeking with the Future Fund. If that is not bad enough, you only have to consider that the legislation as it stands also allows the ministers to dismiss board members for inadequate performance, but we have no definition of that in the bill either. So that is another open-ended and ill-defined provision that could give rise to political interference in the investment decisions of the fund.

Debate interrupted.