Thursday, 15 May 2025

Bills

Superannuation Legislation Amendment Bill 2025

Second reading

Debate resumed on motion of Danny Pearson:

That this bill be now read a second time.

Bridget VALLENCE (Evelyn) (11:32): I rise to speak on the Superannuation Legislation Amendment Bill 2025, which seeks to make several changes to the operation of the emergency services superannuation scheme, the ESSS, by making amendments to the Emergency Services Superannuation Act 1986 (ESS act). Whilst we may consider this bill to be somewhat vanilla in nature, I think everyone in this chamber agrees that superannuation is increasingly becoming an incredibly important entitlement to all employees and a very valuable asset relied on to help many fund their retirement.

With that in mind, we have spent considerable time reviewing this bill and the impact that it will have on members of the scheme, and I do thank the minister and his office for arranging a briefing on this bill and responding to the number of questions that we did have about the measures proposed in this bill. I do thank them for their time. I am grateful to the minister’s office for their responses and the information that they provided, which I did find very useful. As part of my consultation I also engaged with a number of key stakeholders about their feedback on the changes, and I thank them for taking the time in doing so, including the Super Members Council, the Association of Superannuation Funds of Australia, the Police Association of Victoria, the Australian Education Union, the Victorian Ambulance Union, the Community and Public Sector Union and the Rail, Tram and Bus Union. I hope I have not missed any of the stakeholders that I engaged with there.

As some members may be aware, the ESSS was originally established for the purposes of providing superannuation benefits to our Victorian emergency services employees, such as Victoria Police, Fire Rescue Victoria and Ambulance Victoria, and may I take this opportunity again in this chamber to acknowledge the outstanding service of our emergency services personnel. They do a tremendous job protecting our community in what can be very challenging and confronting circumstances in many cases. We do thank our police, our firefighters, our ambulance workers and our paramedics for everything that they do for our community.

The scheme also benefits teachers and many other public sector workers. Some members may be aware that as a consequence of amendments made back in 2005, the former State Superannuation Fund (SSF), which had been in operation since 1925, was closed and all its assets and liabilities were transferred to the ESSS. The SSF had contributing members from the Victorian public service, the teaching service and other participating agencies.

As a result of various legislative amendments over preceding decades, the ESSS is now responsible for administering a number of other public sector superannuation schemes, including the transport scheme, the Metropolitan Transit Authority scheme, the Melbourne Water Corporation scheme, the Port of Melbourne Authority scheme and the parliamentary contributory superannuation scheme. The ESSS now currently has around 124,500 members and holds over $37 billion in defined benefits and accumulation superannuation assets. Given the quantum of these superannuation entitlements and the importance of superannuation, especially to those who are impacted by the bill, the coalition has carefully considered the measures contained in this bill.

This bill seeks to make a number of changes in relation to how members can manage their superannuation contributions and in particular makes significant changes to the composition of the Emergency Services Superannuation Board. Importantly it should be noted by members that this bill is not a result of any independent review or public consultation. Rather it appears the amendments contained in this bill are purely the result of internal discussions between the government and the board. The coalition considers the measures contained in this bill to remove directly elected board representatives from the board to be inappropriate and believes this should be reinstated. We consider that members of publicly funded superannuation schemes should have the ability to directly elect representatives to the board, as is the current position, and we will move amendments accordingly here and in the Legislative Council. I will do that a little bit later in the debate.

However, before going to these aspects in detail, I think it is appropriate that we first consider what the bill seeks to achieve, and secondly, consider the current state of unfunded superannuation entitlements for Victorian public servants – a point of considerable concern. Firstly, the bill seeks to make seven key changes, including providing a 90 per cent superable salary policy for executive officers and other contract employees who are contributors to the Emergency Services Superannuation Scheme; increasing the number of times contributors to the Emergency Services Superannuation Scheme can change their contribution rate each year; increasing the period of time in which a spouse, following the death of a contributor to the Emergency Services Superannuation Scheme, may apply to become a member of the ESSPLAN scheme; reducing the size of the Emergency Services Superannuation Board from 12 to 10 members; abolishing the requirement for State Superannuation Fund members to elect representatives to sit on the Emergency Services Superannuation Board to represent them; requiring board representatives of State Superannuation Fund members to be nominated by unions rather than being elected by members of the State Superannuation Fund; and abolishing the position of deputy board member for the Emergency Services Superannuation Board.

I propose to first address the government’s proposed amendments that are non-contentious and seek to make positive changes for contributing members. In terms of the superable salary, clause 3 of the bill seeks to legislate a previously declared government policy. In 2022, several years ago, the government made a decision to allow the superable salary for new emergency services executive officers and other contract employees who are members of the ESSS defined benefit fund to be set at a rate of 90 per cent of their remuneration, subject to a minimum amount. Executive officers are those senior employees whose terms and conditions of employment are stipulated in a contract of employment with a total remuneration package and are not covered by an enterprise agreement. For example, deputy commissioners and assistant commissioners of Victoria Police are considered executive officers. All operational employees of Victoria Police, Fire Rescue Victoria and Ambulance Victoria are eligible to join the ESSS defined benefit fund. Members have the option of contributing at either 0 per cent, 3 per cent, 5 per cent, 6 per cent or 7 per cent. Contributions are based on a percentage of the member’s superable salary. A superable salary is a member’s gross salary excluding any allowances. Naturally, a member’s contribution rate will impact the retirement benefits they ultimately receive.

Before the 2022 policy decision, the prevailing method of determining superable salary was grandfathered for existing emergency services executive officers while providing them with the ability to opt in to the new arrangements for both past and future service.

This policy was initially implemented informally by notifying employers of the new superable salary policy, but the government is now proposing to formalise this policy in legislation to ensure that it applies consistently to all relevant members of the ESSS. In terms of contributions, currently under section 20A(4) of the ESS act, members of the ESSS can only change their contributions rate once a calendar year and may only do so after giving two months notice in writing to the ESSS. The current process is very prescriptive and was likely imposed when IT systems and resources were limited. Clause 10 of the bill will remove this limitation and allow members to vary their rate of contribution in accordance with a policy to be determined by the board. The bill provides the policy must allow the rate of contribution to be varied at least once a calendar year. Consequential amendments are also proposed to the State Superannuation Act 1988 and the Transport Superannuation Act 1988 to enable SSF members to also change their rate of contribution more than once a calendar year, subject to policy to be determined by the board. These amendments will allow members to better manage their superannuation and personal finances, so this is a positive change, and it will give members more control of the management of their superannuation, which we do support.

In terms of spouse accounts, currently under section 21JA of the ESS act, following the death of a member, a spouse has the ability to become a member of the ESSS accumulation scheme. However, the spouse must make an application in writing within three months of the death of the member. The ESSS has indicated it has received some feedback from members’ spouses, in particular widows, that the three-month period is not long enough to make this application, and the bill seeks to amend this provision by extending the period in which a spouse can apply to become an ESSS member to 12 months. This change is designed to support non-member spouses during a time of grief and potential trauma after a loss. We support this amendment because it provides additional time to a spouse to consider how they wish to arrange their financial affairs after the death of their spouse. We consider this another positive change because it will provide potential members of the scheme with more flexibility and opportunity to access benefits of the scheme.

Now to the proposed changes to reduce the size of the board and remove democratically elected SSF board members. We consider clause 4 of this bill constitutes the most contentious issues included in this bill. Currently under the ESS act the board consists of 12 members that are appointed by the Governor in Council. The composition of the board today is selected as follows: six board members nominated by the minister and six directly elected by members of the schemes. Of those six elected by members, one is elected by Victoria Police members; one is elected by Fire Rescue Victoria members; one is elected by Ambulance Victoria and department of environment, land, water and planning members; and three are elected by members of the SSF.

The government argues that this arrangement is consistent with the Commonwealth superannuation legislation, which generally requires equal representation of employees and employers on superannuation trustee boards. However, as noted in the recent Senate report into improving consumer experience, choice and outcomes in Australia’s retirement system, there has been a marked shift towards superannuation boards consisting of more independent directors to improve governance and accountability. The Australian Prudential Regulation Authority, the Australian Institute of Company Directors and the Productivity Commission have all called for the equal representation model to be reformed and advocated for a model where independent directors have a much bigger presence on superannuation boards. Research has shown that independent directors protect against conflicts of interest and protect against the influence of vested interests and certain stakeholders interfering in the management of funds.

Currently, under the Commonwealth Superannuation Industry (Supervision) Act 1993, a representative of a trade union is not considered to be an independent member. The government also argues the size of the current board is larger than what is considered optimal. To address these issues, the bill seeks to reduce the size of the board from 12 to 10 by reducing the SSF-elected member positions and government-nominated positions by one each. Since the SSF is closed to new members, active SSF members now represent around 11 per cent of the SSF’s total membership. Now, of the three SSF board positions, there are currently two SSF members sitting on the board who both have education and teaching backgrounds.

With the proposed changes in this bill, the new breakdown of the board composition would be five board members nominated by the minister and three being directly elected by members of the scheme – so one being elected by Victoria Police members, one being elected by Ambulance Victoria members and one being elected by Fire Rescue Victoria and Department of Energy, Environment and Climate Action members – with the remaining two SSF members being appointed by declared unions. This proposed change is the most troubling aspect of the bill, removing the democratic right of SSF members to elect their own representatives to the board and letting the minister just appoint a union to do that instead.

As I have referred to, SSF board representatives are currently directly elected by active members of the SSF, and as the minister himself noted in his second-reading speech, this representation ensures the board can make decisions informed by the valuable lived experience of elected members. If the minister himself considers it is preferable for the board to make decisions informed by the lived experience of elected members, then why is this government seeking to strip these members of their right to elect their members to the board? The government argues that because of the diminishing number of active SSF members it has become more difficult to recruit suitable new candidates, resulting in vacancies that cannot be filled. This argument deserves further interrogation against the facts. As at 24 February 2025 there were 61,180 members of the SSF. Of this amount, 6629 are considered to be active members. An active member is a member who is still employed and still eligible to receive superannuation contributions. Active SSF members make up 20 per cent of all active members that currently contribute to a defined benefits scheme administered by the ESSS, and there are currently 34,177 defined benefit scheme active members in total.

Instead of SSF representatives being directly elected by their peers, the government wants to remove this democratic representation and replace it with a process where certain declared unions will instead nominate these board representatives. The bill does not include any specified process as to how a union will become a declared union under this bill. Rather, the bill only provides the minister may, by notice published in the Government Gazette, declare a union as having the power to appoint members of the board. There does not appear to be any sound basis for the removal of the democratically elected representatives of SSF members to the board, and the government’s arguments appear to be full of falsehoods – the main argument being it is too difficult to find people to fill these positions. Currently of the three board positions reserved for SSF members, two are filled by SSF members, as I said, with teaching and education backgrounds. If the proposed amendment in this bill to reduce the composition of the board from 12 to 10 is passed with SSF representation reduced from three to two board positions, there will be no vacancies in respect of SSF representatives. Currently the board only has nine out of 12 members sitting, and of the six positions reserved for government appointment, it has only got four members sitting, with two vacancies to be filled. The government presently has more vacant seats on the board than SSF members.

The amendment also runs counter to the minister’s admission in his second-reading speech that elected representatives help ensure the board can make decisions informed by the valuable lived experience of elected members. The proposal to remove the power from SSF members to directly elect their representatives to the board is an affront to democratic principles of representation.

As the government’s own statement of compatibility which accompanied the introduction of this bill recognises, the removal of democratically elected representatives to the board engages section 18(1) of the Charter of Human Rights and Responsibilities Act 2006, being the right to participate in the conduct of public affairs directly or through freely chosen representatives. The statement of compatibility goes on to state the amendment:

… may be regarded as a limitation on this right, as they can no longer take part in a process which relates to the composition of a Board that makes decisions about a group of members in society.

The government argues this limitation is justified on the basis that it will avoid representative imbalances and vacant positions, which have the effect of disenfranchising members, but this justification is false for a few reasons. First, the representative imbalance will be cured as a result of reducing the board’s composition from 12 to 10 members, with the SSF members having one less representative, and secondly, there will be no vacancies for SSF members as a result of the reduction in board members. This proposed amendment also takes away an important democratic right without any substantive reason, other than it is administratively inconvenient for the government.

The ability to directly elect representatives to the board of management, especially those responsible for administering billions of dollars in entitlements, should be jealously guarded. Given there remains a pool of over 6600 eligible members to act in these two positions it is somewhat difficult to accept that none of these members would be willing to accept the role. There is also a complete lack of clarity and transparency as to how a union will become a declared union. Under the proposed changes there has been no information provided by the government as to what process will be followed or what factors will be taken into account when the minister makes their decision. Given the ESSS is responsible for over $37 billion in member assets and benefits, the highest standards of probity are required in relation to how persons will be selected to make decisions about the management of these funds.

When I asked during the bill briefing if there had been any consultation with SSF members about the proposed changes to board representations, the response from the minister’s office and the departmental officials was no; there was no consultation with SSF members about removing their democratic right to elect members to the board. However, the officials did indicate that the ESSS had undertaken some market research with members on this issue. It really remains unclear what this market research consisted of. In addition, when I asked if an independent review had been undertaken in relation to these proposed changes, officials at the bill briefing advised that the Department of Treasury and Finance had undertaken a desktop review and the ESSS had provided feedback. As you can see, the government has failed to make a sufficient case as to why SSF members should no longer be directly elected as board members. We should not be disenfranchising SSF members from their ability to vote, especially in the circumstance where there has been no consultation with them about these changes. In these circumstances there is no reason to move from a directly elected model to one where a declared union is able to appoint their preferred union hack. As such, in accordance with standing order 64(1) I advise the house of amendments I am proposing to this bill, and I ask that they be circulated.

Amendments circulated understanding orders.

Bridget VALLENCE: Under these proposed amendments that we are circulating now in the chamber the coalition will be seeking to reinstate the status quo and allow SSF members to directly elect their representatives to the board, rather than declared unions. We consider that the voices of SSF members, such as teachers, should be heard. Again, we consider that SSF members, such as teachers’ voices, should be heard and respected by Labor, not disrespected and not allowed to be silenced because of reasons that amount to no more than an administrative inconvenience for this Labor government. We consider that SSF members are in the best position to advocate for their interests at the board level and should not have this right taken away, especially when the government has failed to engage in any consultation about these changes.

I wish to turn to the troubling situation of unfunded superannuation under the Allan Labor government. It is an important topic to discuss, and it is why we consider having democratically elected representatives on the ESSS board so crucial. Victoria’s current unfunded superannuation liabilities, which are owed to current and former Victorian public servants, are at crisis point. Back in 2000 the then Bracks Labor government committed to fully fund the liabilities of the SSF by 2035, which is only 10 years away. It was proposed that liabilities would be fully funded by virtue of the government making annual top-up payments from the Consolidated Revenue Fund. In June 2022 the current Minister for Finance, in his capacity as Acting Treasurer, approved a payment of just over $1 billion to meet the SSF liabilities. However, this Labor government has now engaged in what can only be described as economic vandalism by reducing payments to fund these liabilities, which has only left SSF members’ retirement savings less secure and subject to even greater financial uncertainty. Under Labor’s 2022 financial statement this Labor government, which is supposedly fighting for workers, proposed to defer making superannuation top-up payments to the tune of an incredible $3 billion across the forward estimates. This is $3 billion of public sector workers’ retirement savings that this Labor government is refusing to put aside to secure the financial future of these workers.

It begs the question: why is this Labor government refusing to fund these public sector workers’ superannuation entitlements? The answer is clear: because this tired Labor government has lost complete control of Victoria’s economy and has left Victorians’ financial position in ruins. The fact the Labor government is now refusing to pay $3 billion in superannuation entitlements to Victorian workers tells you everything you need to know about how toxic and destructionist this government has become. The fact this Labor government has stooped so low as to avoid paying Victorian workers their retirement savings is an utter disgrace.

How can this Labor government look Victorian workers in the eye and tell them that they will always protect them when at the same time they are taking money out of the retirement savings to cover up the massive budget blowouts and disasters that they have created and overseen on every single Big Build project in the state. Public sector workers would be really concerned to learn of this. This Labor government has lost all credibility with its core constituency – workers – because they would rather deny paying superannuation to public sector workers than be up-front and transparent with all Victorians about the economic disaster that Victoria is facing. This is a government that will stop at nothing in order to cover up and hide its economic mismanagement and incompetence.

What is worse is the Department of Treasury and Finance warned the Labor government that the dire consequences of this economic vandalism will cost Victorians. In a ministerial brief, which sought the Assistant Treasurer’s approval to rip out $3 billion in superannuation top-up payments, the Department of Treasury and Finance warned:

[QUOTE AWAITING VERIFICATION]

The deferral of payments will significantly increase the superannuation top-up payments that are required beyond 2026–27. This is primarily due to the loss of investment earnings on the $3 billion that would otherwise have been paid to ESSSuper over this period.

It is truly extraordinary. This Labor government’s own Treasury has told it that it will lose millions of dollars in investment income by refusing to make these top-up payments to public sector superannuation entitlements. In fact the Parliamentary Budget Office (PBO) has found that this policy will increase net debt by nearly $883 million.

The financial incompetence of this Labor government is breathtaking. Not only is this Labor government refusing to pay superannuation entitlements to Victorian public sector workers, it is also penalising all Victorians. Refusing to make these top-up payments means that none of the interest or earnings from these payments will be realised and banked. This means that not only are Victorian public sector workers being denied their superannuation savings by Labor but Victorian taxpayers will be forced to pay more because the government will lose all the investment income these payments would have generated if they had been paid as originally planned. It is clear that this Allan Labor government is drowning in debt and cannot even afford to pay the most basic expenses, including the superannuation entitlements of Victorian public sector workers. It is shameful.

Sadly, this story only gets worse. Right now on the PBO’s website it states that in order for Victoria to meet its commitment to fully fund its superannuation liabilities, it will need to make a contribution of at least $2 billion a year. The PBO has also stated that when analysing the impact of the $3 billion deferral:

[QUOTE AWAITING VERIFICATION]

Increased borrowings will be required by future Victorian governments to fund additional superannuation contributions, and higher investment is required to replace the lower returns resulting from lower superannuation asset balances.

In a nutshell, the PBO has found that this Labor government will be forced to borrow even more money if there is to be any hope of fully funding these superannuation liabilities for public sector workers by 2035. This position is totally unsustainable, and this position is totally unacceptable. The fact that this Labor government will be forced to borrow billions of dollars to simply pay its superannuation liabilities just demonstrates how financially reckless and incompetent this Labor government is.

The government’s own budget papers paint an even more depressing picture. In the budget update released in December last year the total budgeted superannuation liability was $17.1 billion for the 2024–25 financial year. However, incredibly, the midyear budget update revised that figure up to $18.4 billion by the end of the 2024–25 financial year. Instead of paying down Victoria’s unfunded superannuation liabilities to public sector workers, Labor is revising the liability up by over $1 billion.

The situation only gets worse over the forward estimates. The budget update estimates that unfunded superannuation liabilities will again increase, to $18.7 billion by 2026–27. Rather than paying down Victoria’s unfunded superannuation liabilities, as this Labor government promised to do, the liabilities keep increasing across the forward estimates. This just represents another broken promise amongst the litany of previous promises made and then broken by Premier Jacinta Allan and her tired Labor government. With the state budget due next week, one can only hope that the Treasurer is listening and addressing this deeply concerning situation of unfunded superannuation liabilities for public sector workers under this Labor government. It is imperative that the Labor government take urgent steps to address this unfunded superannuation liabilities mess that has happened on their watch. Quite frankly, our hardworking public sector workers, our hardworking emergency services workers, our frontline workers, our teachers and our public sector workers in other agencies are expecting to be secure in retirement, and they deserve better from their government, not Labor’s financial and economic vandalism. I commend the Liberals and Nationals amendments to the house.

Iwan WALTERS (Greenvale) (12:01): It is a pleasure to rise again to follow the Manager of Opposition Business and shadow minister. I do so to speak on the Superannuation Legislation Amendment Bill 2025. I will delve into the substance of my contribution shortly, but I just want to address some of the issues that the shadow minister raised and that I think lie behind her amendments, which I will not be supporting. She made a broad point about the unfunded superannuation liabilities of public sector workers. As a general rule, they occur as a consequence of the residual defined benefit dimensions of superannuation and really speak to the rationale for why Paul Keating, Bill Kelty and others in the 1980s brought about those titanic changes to our retirement income system to move away from a defined benefit system to a defined contribution system. Fundamentally, a defined benefit predicated system of superannuation could only be available to a relatively small number of people in our society and in our economy: generally, higher-paid professionals – those in the kinds of public service roles that we are talking about today. The changes that were made in the 1980s were profoundly democratising ones that made an immense difference to our retirement income system and made superannuation accessible for all Australians. I will return to those comments shortly.

The other dimension of the shadow minister’s contribution that I particularly want to pick up on is her suggestion that the amendments to the Emergency Services Superannuation Act of 1986 (ESSA) to remove the requirement for State Superannuation Fund representatives on the board to be SSF members and instead to vary their selection process such that they are nominated by unions rather than elected by members of the SSF was some kind of massive abrogation of workers rights and democratic norms and principles. By contrast, I would suggest that in fact there are an inadequate number of SSF members to render an election viable and that the arrangements that are proposed by this bill would render the governance arrangements of the ESSS analogous to other industry funds. I do wonder whether the opposition of the opposition to those measures is less a consequence of a commitment to democratic norms and more a consequence of that traditional Liberal–National opposition to the very concept of industry superannuation that the potentially not re-elected member for Goldstein was so voluble in his opposition towards in his previous term in Canberra.

As the first speaker subsequent to the minister on our side on this important bill, I will just return to the headline of the bill, which is to ensure consistency in the application of the 90 per cent superable salary policy to Emergency Services Superannuation Scheme members; to assist members in managing their superannuation and personal finances by enabling more frequent contribution rate changes, as the shadow minister pointed out; to better enable non-member spouses of members who die to access the ESSS plan scheme membership during their time of grief; and to make changes to the membership of the ESSS board for efficiency and appropriateness, as I have already alluded to, in light of the current membership arrangements.

Like the shadow minister, I want to acknowledge the immense contribution of those for whom this scheme exists – our public sector workers in Victoria, emergency services workers and teachers in large part. As a former teacher and a member of one of the inheritor schemes that the ESSS is part of, I am deeply appreciative of the work that they do every day. I am conscious that our emergency services, particularly our professional firefighters, remain in the electorates of Kalkallo and Greenvale working very hard to respond to bushfires. At this time of year it is extraordinary that we should have grassfires, bushfires in areas like Kalkallo, Bulla and Greenvale, but nonetheless the vagaries of climate mean that those hardworking emergency services workers are still out there doing their work of protecting our communities.

In some respects it is anomalous that the Victorian Parliament retains legislative competence for matters relating to superannuation given the federal responsibilities for regulating super and our broader financial system. I certainly welcome the appointment of the new Minister for Financial Services and Assistant Treasurer in the Federal Parliament, who I know will do a magnificent job stewarding this system. But it is important to ensure that our hardworking emergency services workers, for whom the Victorian government is responsible, are able to have fair and decent arrangements for their superannuation to ensure that they have a dignified and comfortable retirement.

That leads me to the initial part of my contribution, which was about the reforms that the Labor government in the 1980s brought about in this country, which were world leading in many respects and have brought about a complete transformation of our retirement incomes system. I think I have talked in this place a little bit before in the context of similar bills about the evolution of retirement incomes policy in Australia and elsewhere, from the Bismarck pension arrangements that were brought in the then newly unified Germany in the 1870s to the People’s Budget of Lloyd George in the UK in 1908–09 where the first old age pension provision was brought in but in a very limited way for those over 70 at a time where very few people did in fact live that long – it was an inherently piecemeal system.

In our own country the Fisher government from 1908 to 1915 implemented a number of reforms, including sickness and old age pension, but until the 1980s our retirement income system remained a real patchwork of public and private provision, with superannuation really being confined, as I said earlier, to high-income occupations and to a number of public sector roles. It was in that context, broadly speaking, a defined benefit system which could not be universalised, could not be democratised, because the tax treatment that was afforded to those private superannuation arrangements was fundamentally unaffordable at scale. As we have heard from the shadow minister, even the residual tail of defined benefit contributions, again at scale, creates problematic liabilities for governments.

Superannuation, though, as envisaged by Paul Keating and Bill Kelty in particular –and I think they do deserve credit as architects of that scheme – remains one of the most significant legacies of that era of reform in politics in Australia, along with social policies like Medicare, the floating of the dollar and the reduction of tariff barriers to open up the Australian economy and make it genuinely internationally competitive. It remains one of the most salient legacies and most important legacies of that era. The reason why I think it is so important is that it enabled Australians, irrespective of their occupation and their income level, to have confidence that they would be able to have a retirement that was predicated upon a decent income and a decent standard of living. Along with voluntary savings, including those who already had superannuation and the age pension, the universal pension, compulsory superannuation is an immensely important pillar of our retirement income scheme and is really the envy of so much of the world.

The shadow minister talked about the unfunded liabilities that government has in the context of superannuation.

The challenges that governments in Europe in particular have as a consequence of unfunded pension liabilities are gargantuan. They are one of the primary reasons why those economies have been underperforming in recent years. The significant public contribution that is required to fund those liabilities, taking really from the present generation and from future workers to give to the past, is creating all manner of demographic challenges and economic justice challenges. Superannuation in Australia has simultaneously deepened the available pool of capital domestically, funding infrastructure across Australia but also enabling Australians, irrespective of their class and their income, to have a stake in the productive infrastructure of our country, while simultaneously exporting capital to the world in a way that was inconceivable in the 1980s. I could go on about superannuation, and I will at a later date. I commend this bill to the house.

John PESUTTO (Hawthorn) (12:11): I rise to speak in relation to the Superannuation Legislation Amendment Bill 2025. I want to remark at the outset that the shadow minister has moved amendments, and I certainly recognise and support those amendments and her explanation of many of the technical changes, a couple of which I want to talk about. But I will in my remarks talk about the broader context in which the government is mismanaging the obligation it took to the 2022 election, the commitment it gave to the Victorian people at the 2022 election, to fund on a consistent basis the unfunded superannuation liabilities going forward, and I will talk about that a bit more.

As for the changes in the bill that deal with enhancing the rights of spouses to access entitlements under superannuation policies, of course we support those. This is an important scheme. It not only provides for the material needs of people who are to benefit under the scheme but also is a scheme about emergency services generally. We have seen this week just how important our emergency services personnel are in our community. I know, Acting Speaker Farnham, you and others in this house were honoured to be able to speak to many of our emergency services personnel on the steps on Tuesday when they came here clamouring for justice and fairness in relation to the government’s draconian and punitive changes to the funding of various emergency services. I hope the government takes their cries for help on board, but I doubt it. I do not think they will. It was moving to hear of the plight of many of those people, who are struggling not only with drought but with having spent so much over recent summer months dealing with bushfires, and to see them actually come down here to fight for the respect that we have heard members opposite talk about.

Members opposite have talked about respecting our emergency services workers and the sector generally, yet we have a government that came to office again in 2022 with a commitment that it would fully fund the unfunded liabilities of the defined super schemes by 2035. And what did it do? It is a familiar story. After the election, after having won, it then turned around and said it was going to kick the problem of funding the commitments it made prior to the election down the road. So $3 billion in funding has been booted to after 2027. That might have given the government some immediate fiscal relief from having to find the funds, amidst all the chaos of their budget mismanagement, to actually fund those commitments of a billion dollars a year starting in 2023, but what it will mean is that there will be billions of dollars more required to revisit those payments after 2027, and it will be closer to $5 billion rather than the $3 billion that we are talking about now. The government might say, ‘Well, that’s $2 billion.’ They do not get out of bed for a blowout of less than $10 billion these days – that is what they are used to – but it means a lot to Victorian taxpayers and against the broader budgetary context we find ourselves in as a state. Just this year this government – the worst performing in our state’s history – has to find $52 billion to fund existing debt and then another $72 billion for new debt.

All will have to be borrowed at higher bond rates. When interest rates were low, the government was able to borrow at about 3.6 per cent on average. The bond rate as at September last year was predicted to go up to 4.8 per cent. Over a small amount of money that might not seem like a lot, but when you are talking about borrowings for existing and new debt of around $124 billion – and that was last year, who knows what it is now; we will look at the budget papers next week – that is a massive extra expense. When the government kicks the problem down the road, that is what it is doing to taxpayers. It is imposing on taxpayers more and more of a burden.

But we have heard this story before, just this week. In fact this week might be called the ‘Labor week of kicking problems down the road’, because we saw earlier this week, and I talked about it yesterday, $2.4 billion cut from the government’s commitment to fully fund its share of the Gonski commitments to our government schools. The government claims to be leading the Education State, but it is the worst offender when it comes to low-balling, nickel and diming, its commitments to government schools in this state. It is kicking the problem down the road – if it ever gets there. In 2031 it says it will fully fund the $2.4 billion that it should be funding now and in the next year and the year after that, but it is not going to do that. It is kicking the problem down the road, just like it is doing now with superannuation.

Having made the promise, it is now breaching that faith with the Victorian people. If it was never going to be able to do it, why promise it? If you could not do it, why promise it? It lied over Gonski. It lied over superannuation. It lied over the Commonwealth Games. The list goes, so when I hear members opposite talk about their commitment and showing respect to and for our emergency services workers, isn’t the best way to demonstrate that respect to actually fully fund your commitments? That is what you could do. We all understand the importance of superannuation, and we all understand the problems of balancing intergenerational equity. But what this government seems to have a blind spot for is intergenerational equity. It wants to excuse its own poor performance and just push it down the road. We see it time and again, portfolio to portfolio.

As to the changes in the bill, I do want to address one particular part of the bill which the shadow minister did address at the length. I just want to make a couple of observations about it. The shadow minister pointed out rightly that the rights of active members of the State Superannuation Fund are going to be extinguished – their right to directly elect their representatives to the board. The government says by rejoinder, ‘Well, there are only 6000 active members on the books. There are 124,000 members, so there is no real need and no real justice to be served in retaining elective rights for those 6000-odd members of the fund.’ As if it is a problem that there are not enough members. But I point out to those opposite that they seem to miss the fact that even in their own party they seem to have a familiarity with the idea that a small number of people who are unelected can make decisions on behalf of thousands of Labor Party members around the country. They do not seem to have a problem with it when it comes to their own party. This idea that you can simply wipe away the rights of members of the State Superannuation Fund because there are not enough of them, I have got to say that does not seem to strike the note of fairness I would have expected.

We are talking about the entitlements of superannuation fund members to have a say over their own future, and I think it is a fair point that the opposition makes that there is no real case for abrogating that right when today there are so many convenient ways for groups of people to cast elections in very different organisations. Digital platforms now are innovative, they are very flexible and with an elective pool of about 124,000 and an active pool of about 6000, whichever way you choose to look at those numbers there is no reason why you cannot retain the elective rights of those members to be able to choose who their representatives are going to be. The question becomes: if you want good governance, then what is to be gained in abrogating those member rights in favour of nominated unions and not in favour of truly independent directors?

That would be better. If you were to remove these rights in favour of independent directors of the board, then maybe you could make that argument. I still think it is preferable to retain the elective rights of members of the fund, but to simply say that unions who are nominated and favoured by the government are going to be given as of right the ability and an entrenched position of preference in the system makes no sense to me. It is not right and it is not just. Superannuation funds now, like all other funds under management, are under enormous pressure to deliver consistent returns for members. In an environment that is globally uncertain, it is very difficult, even for conservative funds and products within funds that are conservative. You have to be extremely careful. You need the best and the brightest on the board. You need the best and the brightest on the executive teams of these superannuation funds. I just do not think this government gets it. It has got its priorities wrong when it comes to protecting the rights of members of the State Superannuation Fund in particular, and it certainly has got its priorities wrong when it thinks it can simply walk away and abandon commitments it made prior to the last election to ensure that those unfunded superannuation liabilities will be met in a fair way.

Nina TAYLOR (Albert Park) (12:21): It is a pleasure to rise to speak on this bill. I do want to reiterate that Labor will always protect and strengthen workers superannuation, because we do firmly believe it is within our core values that workers who have – in particular, but not only – protected us in terms of our health or our safety on so many fronts have a dignified retirement. That is certainly the ethos behind this particular fund. I should say Emergency Services & State Super was created almost 100 years ago in recognition of people who safeguard the safety, health and wellbeing of Victorians. What do I mean? Members are those who are at the centre of our community, including police officers, firefighters, paramedics, teachers and support workers. We are tremendously grateful for the incredible work that they do, and that I suppose is a driving force behind making sure that this fund is managed in a way that reflects what one expects in a modern environment in terms of the way funds are managed. Bringing this fund into where we are in the modern era is certainly very, very important, as is futureproofing the fund so that it can endure appropriately.

I do want to pick up on some of the issues raised quite rightly. That is the point of the debate we are having now: to make sure that we have absolute clarity about our firm and unrelenting commitment to supporting the workers who will be, in due course as they retire, seeking the funds to which they have rightly contributed. I just want to pick up a particular point that was made by the member for Hawthorn, who said that the commitment to fully fund the unfunded super liability was made in 2022 and that we backtracked in 2023. I do want to remind the chamber that it was actually in the year 2000 that the Bracks Labor government committed to fully funding the liabilities of the State Superannuation Fund (SSF) by 2035. For the benefit of the chamber we should be very clear that it was a Bracks Labor government that did that and not a Kennett government, for instance.

I should say that this is being achieved by way of annual top-up payments that are made under section 90(2) of the State Superannuation Act 1988, and we continue to make payments into this fund. I would hate for there to be any unnecessary fear or scaremongering among those who do subscribe to this fund. Let it be clear that we are fully committed to this fund – and have been, dating back to 2000 and the Bracks Labor government. I just want to be really clear on that point because I think there were various conclusions drawn in the chamber that were not actually correct or fair, and we will certainly always back our workers.

There were some other points raised regarding reducing the number of directors from 12 to 10. It is being done, I should emphasise, in a way that ensures equal representation of employee and employer members of the board, as was required by the Commonwealth’s Superannuation Industry (Supervision) Act 1993 – that those elements are retained. The size of the current board is larger than is considered optimal, which can lead to inefficient decision-making. I have to say, from my own experience when I was initially doing my practical legal training, it is widely acknowledged, and I can reflect on this too, that the optimum size of a board is between 8 and 10 directors. So I do not think there is anything to be concerned about by reducing it from 12 to 10, factoring in the manner in which this is being conducted, very transparently and appropriately and in line with current Commonwealth legislation as well.

I should say the bill will reduce the number of members on the board representing SSF members from 3 to 2, given the SSF schemes are closed to new members and SSF members are declining. I think that is a really important point here. We know that the overall number of SSF members is declining simply because for that part of the scheme they are approaching retirement, so we do have to futureproof the scheme. There is nothing underhanded here. We are being very up-front for the benefit of the chamber but more broadly for the benefit of the members most of all so they know exactly the reason why and what is driving these changes. Certainly we are making sure that there is representation with relevant experience. Of course they need to have relevant experience, as board members should have, such that active, deferred and pensioner members can have their interests adequately represented on the board, remembering that those members will want to have – and I think again I am being up-front – their values represented on that board. There is nothing controversial about a union representative who has to represent the members and therefore is accountable to those members as well.

I used to work in a union, and I can tell you union members do not hold back. They speak their minds, as they should. So if you are thinking that they are just saying, ‘Yes, sir. No, sir,’ that is not how it works in a union, and neither should it. I am reflecting very candidly. They are up-front and are certainly very forward and generally speaking pretty articulate, I should say, in what they want and what they believe is fair and proper. So rest assured that having their values represented will be important to them nonetheless, let alone to us in terms of the way that we are transacting this bill and ensuring that this very important union and obviously the funds that lead to dignity in retirement are reflective of the incredible work that the members that are represented will have done, those that have already contributed to the future for our great state of Victoria.

Reflecting more broadly on superannuation, we have to admit it is very much backed in by the Labor government, because whenever we see conjecture or any undermining of even the premise of superannuation it generally – and I think it is without controversy to say this – comes from the opposition and I expect probably even more so federally. Way back when, I did some work over in Sweden when I was in my early 20s, and there I was actually shocked, even relative to us, that other students in their 20s would talk about plans for their retirement. They were not about to retire, but it was inherent culturally for them to be thinking about it, planning ahead and contributing to their retirement as soon as possible to make sure that they had the dignity of retirement. Why am I making that comparison? I am saying there is nothing outlandish here about us embedding firm principles, modernising the way that this fund is being managed and ensuring that it is futureproofed, that it can endure appropriately and that we are backing the payments, as I said, which was the promise that was made back in 2000 by the Bracks Labor government. Backing in our workers and making sure that they do have dignity in retirement is a fundamental premise. It is fundamental, I think, and fundamental for a Labor government, but it is also fundamental in a civilised society.

Reflecting on way back when – as I said, that was many, many moons ago; I was much younger then – and thinking where the mindset was in Sweden at that time, you can see that we are firmly embedded in a place that actually makes good sense, and there is nothing extreme or outlandish about that in terms of backing superannuation into the future forevermore. I certainly commend the various changes here, and I have not even spoken to various other changes – pragmatic elements for spouses of members who have passed to ensure they have more time to be able to join the fund when they are going through a grieving process. There are a number of very practical elements that will be transacted, I have no doubt, even further than my learned colleagues have already said. The fundamental premise is we will always protect and back our workers. The underlying purpose of the bill is to strengthen this superannuation scheme.

The ACTING SPEAKER (Wayne Farnham): The member for Ovens Valley.

Tim McCURDY (Ovens Valley) (12:31): Thank you, Acting Speaker. It is a delight to see you in the Chair, a fresh, youthful face like yours. It really is truly a pleasure. I also rise to make a contribution on the Superannuation Legislation Amendment Bill 2025. I commend the member for Evelyn for her comprehensive contribution and obviously the textual amendments to restore the provisions requiring State Superannuation Fund members to be elected as representatives to the board. That would ensure members retain their right to elect their representatives instead of them being union appointments. I note that the member for Hawthorn in his contribution touched on this as well, as will I. He spoke about fairness and making sure there is fairness in representation, and that certainly sums up what needs to occur there.

We know that the bill makes seven key changes. It provides a 90 per cent superable salary policy for executive officers and other contract employees who are contributors to the Emergency Services Superannuation Scheme. It also increases the number of times contributors to the Emergency Services Superannuation Scheme – I will call it the ESSS – can change their contribution rate each year. I think that seems fair; I do not have any problems there. It will increase the period of time in which a spouse – as the member for Albert Park was just talking about – of a contributor to the ESSS, following their death, can apply to become a member. Again, I think anything in this space that can help a family who has had a death of a spouse with the security of the family and financial arrangements, anything that can improve those in those circumstances is a step forward and a terrific thing and we need to make sure that we can put that in place. With a tragedy like that obviously the financial security and future security of the family needs to come first, and this allows for that.

The bill also reduces the size of the Emergency Services Superannuation Board from 12 to 10 members, which I will touch on a bit later as well, and it abolishes the requirement for State Superannuation Fund, SSF, members to elect members to sit on the Emergency Services Superannuation Board to represent them. As mentioned in my opening remarks, it requires board representatives of the State Superannuation Fund to be nominated by unions rather than being elected by members of the SSF, and I think that is quite unfair, as the member for Hawthorn said. There is a lot of money involved here – I think $37 billion, by memory. That is a lot of money to be having without representation by SSF members but rather union representatives. It also abolishes the position of deputy board member of the Emergency Services Superannuation Board.

The ESSS is made up of 124,000 members from across the Victorian public sector, mostly from the emergency services – the ambos, Victoria Police and our fire services – services that we certainly respect on this side of the chamber. We want to make sure that opportunities for superannuation and flexibility in superannuation are fit for them because they do an outstanding job, our frontline services, and we appreciate the work they do. As I said, this is more about giving them the flexibility that they need for them and their family members. Although many of the changes in this bill are mostly housekeeping, as a result of internal discussions between the government and the board of the ESSS, it seems that once again it has tried to slip in this bit about union representation.

That is familiar to us. It does happen as a regular occurrence. There is always something in the legislation that is a little bit tricky, something that looks after their mates, and I think that is the one that happens to be in this particular bill. There is always one, with changes to the legislation around the election of representatives to the state super board being another example of the government taking away the voice of the people and looking after their mates. I think this should be called out. It needs to be called out. As I say, the member for Hawthorn has mentioned it as well. And where was the consultation for the SSF members? Where was the discussion and the engagement with the very people whose superannuation makes up the money in this fund? We need transparency, and it is appalling by this government, again the lack of transparency about the consultation or the lack thereof with SSF members. Given that the ESSS is responsible, as I say, for $37 billion in member assets and benefits, the highest standards of probity are required to make sure that the people that are selected to make decisions about the management of these funds are there, rather than the appointment by the union members. In addition, when asked if an independent review had been undertaken, officials at the bill briefing advised that at the Department of Treasury and Finance, the DTF, a desktop review had taken place. When we talk about transparency or the lack thereof it is here again in this bill.

The proposed changes will take away the democratic rights of members to decide who is on the board and handling their retirement savings. This is people’s futures, and Labor is once again playing political games with the $37 billion worth of retirement planning. We have seen how Labor manages money, and I would not want them to be in charge of my superannuation, that is for sure. Even the government themselves have conceded that these changes will be a limitation of the right to participate in public affairs, in the statement of compatibility. To me that is a fair admission. Victorians are demanding transparency from the government, yet we continue to get more and more smoke and mirrors and deceit with the backroom deals like this and so-called reviews that cannot be scrutinised by the people or even this Parliament.

The bill makes a variety of other changes that will update and modernise the ESSS, including allowing members to change their rate of contribution in a simpler manner as well as extending the period of a spouse or widow to become a member of the ESSS from three to 12 months. Again, that is a positive step forward. The government also seeks to reduce the size of the ESSS board from 12 to 10, as I mentioned earlier, represented by five board members, which I accept, nominated by the minister: the three elected members – one each from Vic Pol, FRV and Ambulance Victoria – and two SSF members. Unfortunately, due to the changes that I highlighted before, this may be two union reps with no ties to the SSF, and that is a concern. This is an appropriate reduction in the number of board members. I do not have a problem with that, as the Commonwealth Superannuation Corporation manages far more super schemes and only has nine board members, so I do not see a problem in the amount of board members.

Overall the bill is largely not controversial, apart from that one section I have spoken about, bar those changes to the democratic rights of SSF members, and as such the opposition is seeking to amend the bill. As I said, the member for Evelyn spoke very confidently about this bill and how these changes will be able to support and make genuine legislation better, and very rarely do we see in this house that the government want to listen to anybody else but themselves. Then time and time again we see bills come back to this chamber after three months, six months and even longer because they have not got it right. I certainly implore the government to consider these amendments, because sometimes they are not the font of all knowledge, and I think it is really important that they look further afield to understand how a bill can be better. They have been in government for a long time now, and too many times we see these bills come back to this place because they did not get it right. I certainly encourage the government to consider this amendment by the member for Evelyn. With those comments I commend the bill to the house.

Chris COUZENS (Geelong) (12:40): I am pleased to rise to contribute to the Superannuation Legislation Amendment Bill 2025. I want to start off with a bit of the history of compulsory super, which was a game changer for workers in our country. Introduced in 1992 by the Keating Labor government, it was about addressing retirement income challenges so all working Australians had the opportunity to access super. The Keating government wanted to ensure that working Australians had retirement savings to reduce the reliance on the age pension. Back in 1992 I was a very young community worker on a low wage. I am not going to talk about my age, but I was pretty young.

A member: You still are, Chris!

Chris COUZENS: Thank you. As a delegate in my workplace I was also a strong union campaigner that actively campaigned for that universal system. I think it was a great example of the labour movement working together. The unions ran a strong campaign, and I do remember how excited the workforce that I was in was about this significant change. It meant that there was a major shift from those who could afford to pay for super to all working people, to ensure that they could afford to have the benefits of a super account in their retirement. This was a really significant change for working people in this country, including in Victoria.

This bill improves the administration and governance of the state’s public sector superannuation scheme to meet the evolving needs of modern-day members. Labor will always protect and strengthen workers superannuation because we believe all workers should have a dignified retirement. That was something that we really saw back in 1992. Since then there has been tinkering around the edges and there have been some changes, particularly around the retirement age, but fundamentally working people have access to super on their retirement, and that is a significant thing that was changed in 1992 and remains to this day. We created the current public sector superannuation scheme, the Emergency Services Superannuation Scheme (ESSS), to provide our emergency services workers and others in the defined benefit scheme with a financially secure retirement. That was what it was all about.

These workers are our ambos, our police and our firefighters, who every day put their bodies on the line to protect us. They deserve to know that when they retire we will have their backs and ensure that they can live a dignified life and that their families will be supported. These workers have given so much to so many in our state. That is what the Emergency Services Superannuation Scheme does, and it is why it is vitally important that we continually improve and modernise the scheme. Thousands of emergency workers are relying on it to be there for them when they need it in retirement. I note that those opposite mentioned that this is some sort of burden on the state. For me, this is about respecting our workers and acknowledging the contribution that they have made in their working lifetime to keep Victorians safe. We should always have that at the forefront of our mind. That is their role: every single day they are out there in our communities keeping our communities safe. Whether it be the ambos or the firefighters, no matter who it is, they should be looked after in terms of their retirement and this fund.

The bill, whilst largely administrative in nature, will ensure that ESSS can continue to provide the services its members deserve and that reflect the modern ways members interact with the super fund.

This bill, the Superannuation Legislation Amendment Bill 2025, will amend the Emergency Services Superannuation Act 1986, the State Superannuation Act 1988 and the Transport Superannuation Act 1988 to increase the number of times members of the Emergency Services Superannuation Scheme, the new scheme and the Transport Superannuation Fund can change their contribution rate each year. Amendments to the Emergency Services Superannuation Act 1986 will also legislate the 90 per cent superable salary policy for executive officers and other contract employees who are members of the Emergency Services Superannuation Scheme. It will allow spouses, following the death of a member, a period of up to 12 months in which to apply to become a member of the ESSS accumulation arrangements, the ESSPLAN scheme, and reduce the size of the Emergency Services Superannuation Board from 12 to 10 members. It will remove the requirement for the State Superannuation Fund representatives on the board to be SSF members, vary their selection process such that they are nominated by the representative unions rather than being elected by members of the SSF and abolish the position of deputy board member.

The superable salary provides the basis for determining both defined benefit superannuation contributions and benefits paid to members. In 2022 the superable salary policy was updated for new emergency services executive officers and other contract employees who are members of the emergency services defined benefit scheme. The policy indicated that superable salary would be determined as 90 per cent of executive and contract workers’ total remuneration package (TRP), subject to a minimum of the highest non-executive salary. While this policy was initially implemented informally by notifying employees of the new superable salary policy, it is now proposed to enshrine this policy in legislation to ensure it is applied consistently in the future.

The bill amends the definition of ‘salary’ in the Emergency Services Superannuation Act so that for a contributor engaged in a contract of employment their salary for the purposes of superannuation is equal to 90 per cent of the TRP or the highest non-executive salary, whichever is the greater. The bill proposes to amend the State Superannuation Act 1988, the Transport Superannuation Act 1988 and the Emergency Services Superannuation Act 1986 to increase the number of times members can change their contribution rates each year. Currently, members of the emergency services defined benefit scheme, the new scheme and the Transport Superannuation Fund can only change their contribution rate once a year.

Labor’s commitment to fully fund the State Superannuation Fund is really significant. Prior to 1995 the state adopted a pay-as-you-go approach to funding the State Superannuation Fund. This meant that benefits were only funded as they became payable, not as they accrued, which resulted in a significant underfunded superannuation liability. In 2000 the Bracks Labor government committed to fully funding the liabilities of the SSF by 2035. This is being achieved by way of annual top-up payments that are made under section 90 of the State Superannuation Act 1988. The Allan Labor government continue to make progress on this commitment, and we are on track to fully fund the state’s unfunded superannuation liability by 2035.

Victoria Police are there for Victorians at all hours of the day and in all weather, and we cannot thank them enough for their service. Of course they are part of this fund. Every day Victoria Police officers put their lives on the line to ensure the safety and wellbeing of others, and their contribution to our community cannot be overstated.

The Allan Labor government thanks our hardworking police officers and their families for their service and commitment. We have made record investments of more than $4.5 billion in Victoria Police to deliver Victorians the modern world-class policing services they deserve. This bill is really important to ensure that we do continue to provide that superannuation benefit to our emergency service workers.

Peter WALSH (Murray Plains) (12:50): I may not always agree with the member for Geelong, but can I actually commend her for her comments about the universal compulsory superannuation scheme. I think that has been a game changer, as she said, and something that has changed retirement plans for all Australians. When people are young they do not think they are ever going to get old, and they do not think they probably need super in their early years either, but it is amazing if you look at the accumulation figures if you start work young and you keep accumulating how big a difference it makes, as the ads on the telly say. You actually have quite a nest egg when you go to retire, so it has been a great thing that has been done.

One of the things with superannuation is that it is important – and it is particularly a federal issue more than a state issue – that they do not meddle with the rules around it too often. It destroys confidence in superannuation. I think the Commonwealth has made some substantial changes around the taxation of superannuation funds, and particularly self-managed superannuation funds, that have actually destroyed some of the confidence in investing in superannuation, because they put caps on it and increased tax rates on it that mean that people who have made long-term plans are now finding they are paying a lot more tax than they ever thought they would around it. But this bill before us does not make a lot of significant changes that would change the day-to-day lives of any of the workers that contribute to this particular fund.

I would like to focus on the issue that the member for Evelyn actually has an amendment on, and that is around the appointment of the board to this particular fund. I think having a democracy where the members of a fund can actually elect the board members is important to maintain, and that amendment achieves that. To give the minister the power to effectively, through the Government Gazette, determine which unions actually appoint some of the members to this board and the power to veto those and ask for names to be resubmitted I think actually flies in the face of a democracy. Members actually have a right to choose who they have on their superannuation board.

This is the retirement nest egg of all these people – the 124,500 members of this fund. Those people who were elected to that board have a very big responsibility, a grave responsibility, to maximise the returns out of that fund, because by maximising the returns out of that fund they actually increase the retirement nest egg for everyone. If they make bad decisions about investments, that costs the fund, and although it is a very large pool and a very large number of people, it still has an impact on people’s retirement nest eggs.

This effectively says half the board members are going to be appointed by the minister as the notional employer of all these people compared to other super funds, where there are actually industry employers on industry superannuation funds because they are the employer. The government is not necessarily the best manager in the world of money, and I think they need to seed that board with people that have experience other than those that the government would appoint and others that the unions would appoint. I think it is important that the members actually have a say. They may end up being the same people at the end of the day, but it is important the members actually have a say in doing that. I would urge those on the other side to give serious consideration to the member for Evelyn’s amendments so that that is actually put in place. I would have thought those on the other side that speak about democracy and speak about unions having elections for union positions would support the fact that there is actually a vote from the members of these funds for those board members who are going to be representing them through that particular issue.

It is also interesting that in some ways, as I started to say, this legislation prescribes the way a union is going to be designated to be the body that appoints members to the board. I would have much preferred to see that in legislation.

You may have heard me speak a number of times about enabling legislation versus prescriptive legislation. This is another example of where we have enabling legislation that sets up a process that never comes back to the Parliament to be scrutinised. It is done by the relevant minister making a determination, it goes to the Governor in Council on a Tuesday morning, it is published in the Government Gazette and that is the end of it. If the government is so committed to having a prescribed union appoint these people, that union should be prescribed in the legislation so this house can scrutinise it – so we can make comment on it and so those on the other side can make their comments on whether they think that is the most relevant union to do that. Why do we have to continually have legislation that just puts in place a framework which is then a fait accompli by a minister and the Governor in Council? I think, as a principle of legislation, we are not only here as parliamentarians to help our constituents in our respective electorates, we are also legislators, and that is our responsibility when we come to this place. I think it is important we actually have legislation that has the details in it so we can scrutinise that legislation rather than effectively have a process where a respective minister can make a decision and it goes to the Governor in Council, the four ministers on rotation for that particular Tuesday morning sign off on it, it is published by the end of the week and it never comes back to this place. I find that system very wrong as a legislator and someone who takes this whole process very, very seriously.

The main point of contention in this legislation, as I see it, is the appointment of the board positions and how that is done. Whether you have a board of 12 people or whether you have a board of 10 people, it is just conjecture about what is the most effective number. I think the most effective number on boards, from everything I have read, is either nine or eleven. I think if you have less than nine – and you should have an uneven number; you should not have a rounded number for a board. But if you are going to have seven, it is probably a bit small if you have got a couple of difficult people on that board.

Tim Richardson interjected.

Peter WALSH: Fifteen is far too big.

The ACTING SPEAKER (Wayne Farnham): Member for Mordialloc, you are not in your correct seat.

Peter WALSH: It is wrong to respond to interjections, but 15 is far too big for a board. All the stuff I have read and all the stuff that the Australian Institute of Company Directors talks about suggests that nine or eleven is probably the most effective number for a board. If you go any smaller, you run the risk of a particular personality dominating that board far too much. But I suppose it just shows the member for Mordialloc’s inexperience with boards, that he would make a flippant interjection like that. I have taken the bait and run with it as well, but that is fine.

But it is serious. We are talking about a board that is going to have some $37 billion worth of investments to manage. That is a big responsibility. I know it is just noughts and big projects that they manage, but if they have a particular big project that goes bad, that actually impacts everyone’s retirement nest egg. That is why it is so important this board actually does its job. We all see the competition between the for-profit sector in superannuation and the industry funds in superannuation, and we see the ads on telly about which is better and which is not better. There is competition in the superannuation industry for people to choose where they actually put their investment. If you start paying superannuation as an 18- or a 20-year-old when you start working and you are retiring in your mid-60s to 70s, that return on investment year on year on year on year makes a huge difference to how much money you will retire on.

Mathew Hilakari interjected.

The ACTING SPEAKER (Wayne Farnham): The member for Point Cook will come to order. The member for Murray Plains, through the Chair.

Peter WALSH: I am not going to pick and choose which is the best super fund; that is for people to make their own choices about. But I think I would support the member for Evelyn and her amendments, and I urge the government to actually seriously consider making sure that the members that are paying into this super fund – the members that actually will get retirement benefits out of it in the long term – have a say as to who is on the board representing their interests, given that the government already gets to appoint the other half of the board. I commend those amendments to the house.

Sitting suspended 1:00 pm until 2:02 pm.

Business interrupted under standing orders.