3 June, 2021
I move amendments (1) to (14), as circulated in my name, together:
(1) Schedule 3, heading, page 29 (line 1), omit "Best financial interests duty", substitute "Duties of trustees".
(2) Schedule 3, item 9, page 30 (lines 21 and 22), omit the item.
(3) Schedule 3, item 11, page 31 (line 1), omit "financial".
(4) Schedule 3, item 13, page 31 (lines 14 and 15), omit the item.
(5) Schedule 3, item 15, page 31 (line 21), omit "financial".
(6) Schedule 3, item 16, page 31 (lines 26 and 27), omit the item.
(7) Schedule 3, item 17, page 32 (line 1), omit "financial".
(8) Schedule 3, item 20, page 32 (line 28), omit "financial".
(9) Schedule 3, item 20, page 33 (line 1), omit "financial".
(10) Schedule 3, item 20, page 33 (line 10), omit "financial".
(11) Schedule 3, item 21, page 33 (line 14), omit "financial".
(12) Schedule 3, item 21, page 33 (line 18), omit "9, 11, 16", substitute "11".
(13) Schedule 3, item 21, page 33 (line 23), omit "amendments made by items 13 and 15 of this Schedule apply", substitute "amendment made by item 15 of this Schedule applies".
(14) Schedule 3, item 22, page 34 (line 16), omit "financial".
These amendments are in respect of the change that is identified in relation to the definition of 'best financial interests' duty. Item 9 of the amendment bill omits 'best interests' and replaces it with 'best financial interests' in the Superannuation Industry (Supervision) Act 1993. The government states that it wishes to increase the accountability of trustees in their day-to-day operations and investing members' money. Whilst this may, at first blush, appear sensible, it has significant potential consequences for the interests and wellbeing of super members and is in fact not founded on any recommendation or proper basis. This is because, when considering whether something is in best financial interests alone, we also capture a large number of activities and investments that exist in a grey area and that may in fact be beneficial to members of super funds but are potentially now going to be excluded as a result of this amendment. For example, an ethical super fund purchasing carbon offsets or spending money planting trees to reduce emissions to achieve an overarching goal of reaching a net zero emissions goal around their investment portfolio—something which the member would arguably want—could now be prohibited under the best financial interests covenant, unless we have a major change from this government, in accepting putting a price on carbon or in actually ensuring that there is proper financial recognition of the impact of our emissions.
I don't think the change that is proposed in this bill by the government is necessary. Commissioner Hayne was clear that he saw the existing best interests covenant as adequate. The common-law definition was also upheld by Justice Jagot in APRA v Kelaher. Therefore, amendments (1) to (14) seek to omit any reference to 'financial' in the best interests covenant. This will amend schedule 3 of the bill and remove that reference to 'financial'. The government has refused to clarify that social corporate programs will not be excluded or targeted. In fact, they are likely to be targeted by this amendment. This raises serious questions as to the motivation and the true intent of the government with this amendment, and therefore I commend my amendments to the House.