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

I indicate again that, on this occasion, because of the circumstances of the Future Fund legislation that is before us, Labor will be supporting the amendments moved by Senator Murray. Again, this issue has been fairly significantly canvassed at Senate estimates. The approach of the government is business as usual. Despite the fact that the government claims that the Future Fund will be independent and at arm’s length and despite the fact that this fund will ultimately accrue over $100 billion in assets, it is business as usual as far as the government is concerned when it comes to appointments to this board. That is not good enough. We are not dealing here with an everyday statutory authority; this Future Fund will have truly enormous assets under management. It will become very quickly, if not almost immediately, larger than any superannuation fund in the country. The implications of this are very significant, yet the government comes into the other place and says, ‘As far as the selection of board members goes, it is business as usual.’ That is not appropriate in these circumstances.

For those who are not aware of the process, the Minister for Finance and Administration, Senator Minchin, and the Treasurer, Mr Costello, will gather names and will then appoint whomever they like, subject to their decision being ratified by cabinet. They will just appoint whomever they like. That is the way it works at the present time. I am not saying that that is inappropriate in other circumstances, but Labor argue very strongly that it is very inappropriate in respect of the Future Fund and it is not what the government committed to and promised in the election campaign last year. The closest analogy is superannuation fund practice in this country. At the present time, the prudential regulator, APRA, which this government established, is going through the background of every trustee—the independent guardians, if you like, of superannuation funds in this country—checking them and relicensing superannuation fund trustee boards. Amongst other things, it is applying the fit and proper person test. The government is not even going to apply a fit and proper person test to check the backgrounds of the individuals that it proposes to appoint to the Future Fund board. It will not even go that far.

It seems to me that, if you wanted to look at a model that involves a greater level of both scrutiny and probity in appointment to a body such as this, you would say, ‘All of the applicants will be subject to a background check by APRA, the prudential regulator.’ Let them carry out the check as to whether they are a fit and proper person and the other range of checks that are carried out on trustees. At least ask them to do that, but that is not going to happen. At the end of the day, we are told in estimates that the check will be that as carried out by the Minister for Finance and Administration or the Treasurer and their offices. That is what goes when it comes to the appointment of members to this board. Labor does not believe that that is good enough, given the Future Fund’s massive asset holding and the comparable practice with regard to superannuation trustees, which is the closest comparison and practice in this country.

The minister himself raises the future fund and the guardians in New Zealand. Apparently, New Zealand inspired the Treasurer. It is interesting. In New Zealand, even the New Zealand Labour government recognised that they could not get away with business as usual when it came to board appointments to their future fund over there. It is quite instructive to look at what occurs in New Zealand. I do not necessarily agree with this model, but it is better than business as usual here whereby the minister just ticks the names off in his or her office. Goodness knows what criteria they use. In New Zealand, in appointing members to the future fund board, the minister’s recommendations follow nominations from an independent nominating committee. We have not got that in Australia. On receiving those nominations, the minister must consult with representatives of other political parties in parliament before recommending to the Governor-General who to appoint to the board.

Even New Zealand has departed from the norm when it comes to making appointments to its future fund board, but this government does not. It just wants business as usual. There may be very well qualified people appointed. I will have a look at the names, but we remember Mr Gerard. I do not want to badger the poor fellow, but he had a tax problem with his company apparently in the form of tax havens overseas in a couple of the Caribbean islands. Surprise, surprise! He also donated $1 million to the Liberal Party and ended up on the Reserve Bank board. On that occasion, the Treasurer was responsible. Given the importance of the Future Fund board, the current method of appointment does not pass any reasonable test of any attempt at any level to be independent and at arm’s length and there is no scrutiny of the proposed members of the board.

Senator Minchin can assure us all he likes about how fantastic they will be, and we will look at the names at the time. But even Senator Minchin cannot assure us that there has not been some particular problem in the past. They may not find out about it. The minister’s office just asking through the old boy network of the Liberal Party to do a check on particular individuals is not an effective way to check on their backgrounds.

There are a range of models for appointment that can be looked at. We thought about a number of different models that could be adopted to lift the appointment of board members to the standard which is appropriate. There are a number of different models, but we certainly think the model outlined by Senator Murray and the Democrats in their amendment is a significant improvement on the ‘anything goes’ approach that this government intends to take to the appointment of members to this board.

I think the Treasurer, Mr Costello, is a touch arrogant when it comes to these things. I can remember him when he appointed former senator Senator Short to the Eastern European Bank for Reconstruction and Development very arrogantly rejecting all the names from Treasury and saying, ‘I’ve got the right; I’ll appoint whom I like.’ That was his explanation to the House of Representatives in question time some years ago when asked about that appointment—arrogantly saying, ‘I’ll appoint whom I like.’

Senator Minchin, to give him credit, is a bit smarter than the Treasurer when it comes to this these sorts of appointments. I would have thought Senator Minchin could have convinced the Treasurer of the need for a more prudent, rigorous process of board appointments, just on this one government instrumentality. Of all the instrumentalities and boards we have, you would think that the approach to this area could have been the exception to the normal arrogant approach of the Treasurer, Mr Costello, of: ‘I’ll appoint whom I like. Don’t question me.’ That is his attitude when it comes to appointments. But, no, it is going to be business as usual. The Labor Party believe that is inappropriate in this case and we support the Democrat amendments as a consequence.