House of Assembly Fifty-First Parliament, Second Session (51-2) 51 2 Parliament of South Australia House of Assembly published Bills Statutes Amendment (Ethical Investment—State Superannuation) Bill STATUTES AMENDMENT (ETHICAL INVESTMENT—STATE SUPERANNUATION) BILL Second Reading Second Reading Second reading. Mr HANNA House of Assembly Mitchell Mr HANNA (Mitchell) (10:47): I move: That this bill be now read a second time. This bill has been passed by the Legislative Council. It is legislation that is beneficial and harms no-one. It gives members of public sector superannuation funds a choice as to the nature of investments where their moneys might be deposited. It gives public servants an option to invest in ethical superannuation funds. There are a number of quite clearly defined products in the investment market that would fit the bill. I stress that it is a matter of choice purely for public servants. If this bill is not passed they are stuck with investments that they do not necessarily want their money supporting, so it is about choice for those liberal democrats in this house, I stress. I note that the Liberal Party, Family First and the Democrats supported the bill in the Legislative Council. It was promoted by the Hon. Mark Parnell of the Greens, and I note that I inquired of the Treasurer many years ago why there was not such an option for our public servants. At that time the reply was that there was no demand for it, but of course public servants had never been asked whether or not they wanted such a thing. Clearly they do, and Mark Parnell went to the trouble of getting a large number of signatures to demonstrate that people want this choice. Whether or not they exercise it is another matter. All we are asking is that public servants have the choice to tick a box on their superannuation form that will give them the choice for their funds to be solely invested in ethical investment options. I think members understand what it is about: it is a simple proposition, and I hope we can take this bill through all stages after suitable debate this morning. Mr KOUTSANTONIS House of Assembly West Torrens Mr KOUTSANTONIS (West Torrens) (10:51): The government does not support this legislation or the amendments. Ethical superannuation sounds fantastic, like something we should all be excited about, but difficulties arise when you start defining what is ethical, and there is then the cost. Personally I would like to see this matter researched further, as would many members on this side of the house. The member for Ashford has done a lot of very good work on this matter and has taken it so far as to refer the matter to the Economic and Finance Committee, which is taking its time to consider and deliberate on her recommendation passed in this house, and a report will come before us when we return on 11 September. The Hon. S.W. Key House of Assembly The Hon. S.W. Key: Hopefully before I retire. Mr KOUTSANTONIS House of Assembly Mr KOUTSANTONIS: Hopefully, it will be a very long time before she retires. If anyone tries to force her, she can speak to me any time she likes. Amendments were moved in the Legislative Council by the Hon. Mark Parnell MLC, a member of the Greens. If enacted the amendments would have inserted in the Southern State Superannuation Act (which established the Triple S scheme, the state Lump Sum Scheme and the Parliamentary Superannuation Scheme) a requirement that members be permitted to invest their money in a class of investments based on a consideration of the impact of those investments on society and the environment, whatever that means. The House of Assembly recently rejected similar amendments proposed by the Legislative Council for the Statute Amendments (Police Superannuation) Bill. Only a relatively small number of members have chosen this type of investment option in other schemes, and it is estimated to be less than 1 per cent in the experience of peer schemes. The amendments as proposed will also cause conflict with the existing objective, contained in regulations of Funds SA, to achieve the highest return possible. This is for people who are saving up for a nest egg for when they retire. Given the increased costs in the world, with petrol prices and the cost of living going up, working families are under increased pressure. Mr Hanna interjecting: Mr KOUTSANTONIS House of Assembly Mr KOUTSANTONIS: I sat quietly through the member for Mitchell's remarks; I hope that he will give me the same courtesy. Given that he is on a defined scheme, I think he should remain very quiet about this sort of thing. A further concern is that if the boards of Funds SA and Super SA have to create their own socially and/or environmentally responsible product in order to comply with the proposed amendments, they will have to ensure that all component investments on offer are in fact based on the consideration of the impact of investments on society and the environment. This will place an immense administrative and compliance burden on the boards of Funds SA and Super SA. It would increase investment costs significantly at a time when global markets are experiencing a massive downturn. There is potentially a significant cost associated with this approach, and it is likely that that cost would have to be borne by all members covered by the Southern State Superannuation Act. The same level of responsibility to verify that the assets on offer were, in fact, environmentally and/or socially responsible would not fall under Funds SA or Super SA if there were no legislation dealing with such an option and, as an alternative, a product sourced directly from an investment body specialising in such investments in the commercial investment markets were simply made available to Super SA members. If such an approach were to be pursued, it would be better done outside legislation to ensure that the best possible product could be provided. This would ensure that a socially and/or environmentally responsible investment option would be viable (which is the most important aspect we are looking for), and it would be based on the notion that members choosing that product should pay the full cost and hence ensure no cross-subsidisation, given that only 1 per cent of people who have these options available in other funds are taking up the option. I commend the Greens in the upper house, the member for Mitchell and members on this side who support the amendments. I read with interest the Hon. R.I. Lucas's contribution in the upper house, where he supported the amendments and then went on to argue why they were a terrible idea, which is typical of the Hon. Rob Lucas: he says one thing and does another. He convinced me, even though I would not take financial advice from him, given that he ran budgets in deficit for the entire time he was Treasurer and that he bankrupted the state. He has an appalling record of financial management of this state—so much so that he was sacked as shadow treasurer by his new leader because of his incompetence. The teachers did not like him, and he closed my old school. He has been there a long time but, even though he was such a great financial manager, he was sacked by his own leader. The government will not be supporting these amendments. I think that it is safe to say that a response will be coming soon to this place about ethical superannuation. I think it is a force that no-one can stop. I think people are looking for ethical investments. I do not want to invest in blood diamonds— The Hon. L. Stevens interjecting: Mr KOUTSANTONIS House of Assembly Mr KOUTSANTONIS: Blood diamonds, member for Little Para, relates to when nations with a poor population are exploited by multinational companies, such as De Beers (thank God I have parliamentary privilege), where families are working in mines with very unsafe practices. They buy these diamonds at a very low rate from these poor, developing nations and then sell them at exorbitant prices to idiots like me who get engaged. That is why I would like to see more ethical investment. However, we do not want to see these funds bear a larger cost that would risk returns on working families and their superannuation investments. Mr GRIFFITHS House of Assembly Goyder Mr GRIFFITHS (Goyder) (10:57): I indicate from the start that the Liberal Party supports the bill. Mr Koutsantonis House of Assembly Mr Koutsantonis: However— Mr GRIFFITHS House of Assembly Mr GRIFFITHS: The member for West Torrens wants to put words into my mouth. I will outline a few things but, first, I want to defend the Hon. Rob Lucas in relation to some of the comments just made by the member for West Torrens. I am only a relatively new member in this house but, from the outside perspective I had of the difficulties facing the Liberal government from 1993 to 2002, I think Rob Lucas did a fantastic job. Hard decisions had to be made, and quite often the government on the opposite side of the house will say that hard decisions need to be made and that we do not have the spine for it. I think that 1993 to 2002 demonstrated the opposite. I can say only positive words about the relationship I have with the Hon. Mr Lucas because, in my shadow finance role, if there are any areas on which I need some historical information, he is very happy to provide it to me at any time. The ethical superannuation investment option is a difficult one to consider. As a basic principle, as the member for West Torrens alluded to, it has been discussed in the Economic and Finance Committee. As I said yesterday, my basic principle is to support ethical superannuation investment options, and that is why, when the member for Ashford moved her motion in the House of Assembly upon which the Economic and Finance Committee is undertaking its work, I rose to support it. As we become more socially conscious as a community, we want to make sure that, where significant dollars are invested, and for most people their house and superannuation investments are where their largest investments are held, we want to make sure that we do it in a way that we are comfortable with, in all possible ways. Some people, and it is very much a minority, make a conscious choice to invest their superannuation in different styles of funds. For most people, it is not necessarily an ethical choice: it is based more on the relative risk associated with the investment scheme they choose. Some choose a high-growth option, which in itself attaches a greater chance of return, but also a greater chance of a negative return. I have taken that up, and I have been caught significantly in the past six months with the dive in the sharemarket. It will take a while to recover from the losses I have experienced. Mr Pederick interjecting: Mr GRIFFITHS House of Assembly Mr GRIFFITHS: I apologise to the member for Hammond; if I have cost him money, I am sorry. I was advised that something like 2 per cent of public sector employees actually make a conscious decision on where to invest their funds. Most employees leave it in the default option, which is just a general growth option. The member for West Torrens mentioned the fact that less than 1 per cent of people in superannuation investment option schemes choose to take up an ethical choice option. Ethical choice in itself is a very subjective term. How do you associate it? Do you associate it with industry, do you associate it with products that might be produced, or do you associate it with services provided to which you might take offence? It is really hard to determine anything that is actually an ethical superannuation investment choice. The Economic and Finance Committee has received some correspondence about funds managers who consider ethical superannuation issues in their suggestions on fund choices for investment of public sector funds. So, to some degree it is taken into consideration. However, when we debated the police superannuation bill, it was very clear from the advice provided by the Treasurer and the Treasury and Finance officers that the cost of providing an ethical superannuation option would outweigh the number of people who would choose to invest in it. That is why the government chose not to support it during the debate on the police superannuation scheme options. It is a difficult issue. The Liberal Party is determined to support this bill; it has certainly voted that way in the Legislative Council. The shadow treasurer and I have discussed this matter. We recognise the fact that many people in South Australia, particularly in the Public Service, wish to take up ethical superannuation options. I recall a website where that option was provided for people. I do not think the numbers were that great. From memory, only about 50 people flagged the fact that they wish to take up ethical superannuation options—but it is there. I commend the Hon. Mr Parnell for introducing this bill. I know that considerable debate occurred on the merits of this bill—amendments were suggested by the Hon. Mr Hood—in the Legislative Council. It is appropriate that it was supported in the Legislative Council and that it has now come down to us. It is disappointing that the government does not appear to have provided the amount of information required for us to make a more objective assessment of it. The government has indicated that it is not supporting this bill because of the increased costs, but it has not defined what those costs are. I think that, if we intend to make informed decisions, we need to be provided with that information. My colleagues on this side of the house intend to support the bill, and we commend the member for Mitchell for supporting the Hon. Mr Parnell and introducing the bill in the House of Assembly. Mr HANNA House of Assembly Mitchell Mr HANNA (Mitchell) (11:02): I simply make the point that the government's position means that, if the fund managers for our public servants—and, indeed, for politicians—chase the dollar by investing in companies which are the world's biggest polluters, or if they mine uranium or are involved in gambling or tobacco, or any of those things which some of us do not like, superannuants will not have a choice about whether to continue investing in those things, they will be compelled to invest in those things, and that is distasteful. However, the government has the numbers. I sincerely hope that this issue of choice for people—and ethical choice for Public Service superannuants—will be revisited one day. Second reading negatived.