Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I thank all senators who have contributed to this debate on the second reading of the Superannuation Legislation Amendment (Trustee Governance) Bill 2015. Let me just address some of the issues that have been raised during the debate, in particular some of the issues that have just been raised by Senator Conroy. The first point that I would make is that this bill will deliver very important improvements to corporate governance when it comes to superannuation funds. With the greatest of respect to my good friend and valued colleague and member of Her Majesty's most loyal opposition Senator Conroy, the world of superannuation has changed since 1992. That was actually a key finding, a key observation, of Jeremy Cooper in the Cooper review, which I note that, in Senator Conroy's contribution today, he sought to disown but which was commissioned by the previous Labor government. The previous Labor government asked Jeremy Cooper to inquire into the superannuation system at the time and to make recommendations on how it could be improved. His finding—not the coalition's finding, not the Liberal Party's finding, not the National Party's finding but the finding, the very considered conclusion, of the Cooper review—was that the equal representation model originally enshrined in the SI(S) Act, where employer representatives and union representatives make up in equal numbers the boards of various industry funds, is no longer contemporary.

There are a range of reasons why it is no longer contemporary. Firstly, this is big business now. The superannuation system generally, including industry funds, is looking after a very big pool of capital. It is looking after the retirement savings of a lot of Australians, and we have got to make sure that the corporate governance arrangements are such that the interests of those members are appropriately and adequately protected and looked after. The other big change is that the composition of the membership, including the composition of the membership of industry funds, is very different to what it was in 1992. Some people have made the point that these funds—and it is fine—advertise for additional members. A growing number of their membership are not related to the industries that originally made up those industry funds. So to say that somehow employer reps and union reps elected by members employed in an industry that is connected to a particular industry fund are best equipped to look after the interests of everyone, including those members that are not actually connected to that industry, is just false.

Senator Muir, I have to very directly address a very inaccurate and dishonest point, if I may say so, that Senator Conroy made—that this is somehow about kicking truck drivers and timber workers off industry super fund boards. That is just completely false. There is absolutely nothing preventing an industry fund from having a truck driver or a timber worker on its board in the future, assuming that he or she has the appropriate qualifications and the appropriate capacity to contribute. I am sure that there are many timber workers and truck drivers who would be able to make a good contribution, and there is nothing in this bill that would prevent that from being the case in the future. So I completely dismiss that.

What we are trying to do in this bill is to say that at least one-third of the directors on the boards should bring an independent perspective. This is just part of modern high-quality, best-practice corporate governance. This is to ensure that there are appropriate tensions within the board to ensure that the interests of all members in that fund are appropriately taken into account.

There are actually a number of industry funds that do not find this prospect that scary. I was the shadow minister in opposition for financial services and superannuation and I remember very well a dinner that I had with the board of Hostplus—an industry fund. Senator Muir, you would be interested to know that, on its board, Hostplus—they have got an independent share for starters—has one third independent directors, a third employers and a third union representatives.

Let me say to you: it works very well for them. It is a very good fund, and they have done a very good job under that sort of corporate governance structure. It is all about moving with the times. It is all about making sure that the governance structure, which sits over the top—