Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

It would be very interesting times indeed with this sort of power. That is clearly not arm’s length and totally independent with a general principled investment mandate enshrined in legislation if ministers—in this case, the finance minister and the Treasurer—are given the power of issuing the investment mandate and varying it from time to time. Critically, it is not disallowable by parliament either, so it is even worse.

I have used the trustee analogy time and time again because I believe it is the relevant analogy of comparison. No government in this country has the power to direct, in any way, shape or form, trustees of superannuation funds in this country. It has no power to do so—and it should not. There is a general principle, a prudent-person principle, which is: diversify investment commensurate with safety, effectively treat it as your own money in the sense of investing it safely and securely and in a well-balanced way. I think having the prudent-person test enshrined in law has been one of the great strengths of the Australian trustee system in respect of superannuation governance. We have avoided—and I think it is very important that we avoid, for a whole range of reasons—the potential of any government dabbling in the investment direction of a superannuation fund. What do we get? The one exception to this rule in Australia is to be the Future Fund, which is intended, according to the government’s claims, to pay accrued superannuation liabilities in defined benefit pension funds for public servants.

Why do we have just this one particular body accruing assets subject to ministerial direction? Labor believes that is inappropriate and that it should not be permitted. It was not what was announced in at the 2004 election. Those directions are not even subject to disallowance, so there can no discussion. That confers enormous power of investment direction on those two ministers. That is not a personal critique of Senator Minchin or even the current Treasurer, Mr Costello. I am not particularly reflecting on them as individuals; I do not want to do that. But it confers enormous power on the holders of that office to directly impact on a range of investment decisions in which those moneys are held.