STATUTES AMENDMENT (POLICE SUPERANNUATION) BILL

Committee Stage

In committee.

Clause 1.

The Hon. M. PARNELL: With the indulgence of the committee, I would like to make a brief contribution, which consists primarily of a personal explanation. The reason for doing so is that I said some things on the topic of superannuation last week in parliament that were incorrect. I will take a very brief opportunity to correct the record.

Members might recall that on Wednesday last week I introduced a bill to provide an ethical superannuation choice for public servants. I mentioned at that time that I included in my bill provisions that relate to this bill—police superannuation; however, I withdrew the provisions from my private member's bill, knowing that we would be debating them today. The amendments to which you referred, Mr Chairman, are mine, and they provide an ethical superannuation choice for police officers.

The explanation that I feel I need to give is that, on Wednesday last week, I outlined how I had been to the Super SA and Funds SA website and found that one of the large companies in which the funds invested in the international stream was Altria, the parent company of tobacco giant Philip Morris. I spoke about the hypocrisy of the government in allowing public servants' superannuation funds to be invested in a tobacco company. Last Wednesday, I said the following:

It amazed me that some time around August last year Super SA quietly disinvested itself in Altria shares. When we looked, they had gone; the shares had been sold.

I had a conversation this week with Mr John O'Flaherty, the General Manager of Super SA, and he pointed out to me that I was wrong. In fact, we have not disinvested ourselves of these tobacco shares; the tobacco shares are still owned by Funds SA.

Apparently, the parent company underwent some restructuring and, as a result, it no longer appeared on the website in the form that it had. My understanding is that it may now be broken into some smaller parcels. So, I apologise to Super SA for suggesting that it had sold the tobacco shares. The tobacco shares are still there. Last Wednesday in parliament, I said:

Clearly, some sort of ethical screen is being applied. My feeling is that it was too embarrassing for the government to keep on investing in Marlboro. Clearly, if a test has been applied, I want to know what the test is, and if we are going to put one in place, let us put one in place to give public servants, politicians, and the police and others a chance to have an ethical choice.

Again, I was wrong: there is no ethical test in place. I apologise to Super SA for suggesting that it applies ethics in its investment and that there is some hidden test of which I am not aware; that is clearly not the case. So, the mistake was mine, and it resulted inadvertently from a restructure in the tobacco industry. I still maintain, however, that it is a hypocritical situation for the public sector to be investing in tobacco, but that is a debate for another day. I wanted to put the correction on the record in clause 1, and I thank John O'Flaherty, General Manager of Super SA, for setting me straight on that matter.

Clause passed.

Clauses 2 to 32 passed.

New clause 32A.

The Hon. M. PARNELL: I move:

Page 12, after line 26—After clause 32 insert:

32A—Amendment of section 7A—Accretions to members' accounts

Section 7A—After subsection (3) insert:

(3a) If members are permitted by the Board to nominate a class or combination of classes of investments a class of investments based on consideration of the impact of the investments on society and the environment must be made available to members (subject to terms and conditions determined by the Board).

All my amendments (and I have five on file) relate to the same issue; therefore, I move this amendment and test the will of the committee in relation to all my amendments.

This amendment is very straightforward, and I will not repeat now all the things I have said in the past in relation to ethical superannuation. As I see it, the position is very straightforward; that is, our police are no different from other public servants, who do not have the same super choice that exists in the rest of the community. Therefore, they need an option to have their superannuation funds invested in an ethical fund.

The concept I use in this amendment does not state that an ethical fund must be provided as an option in all cases—only if choice is to be provided. My amendments state that, if a choice is to be provided, one of those choices should be the ability of superannuation fund members to nominate a class of investments based on consideration of the impact of the investments on society and the environment, and it must be made available to members. So, if there is to be a choice, make this one of the choices.

Those members who entered parliament at the last election and who signed up to the parliamentary No. 3 superannuation scheme were presented with a choice. From memory, there were seven choices, and they ranged from high risk to low risk type investments, but none of those choices was an ethical investment choice. As a result, I imagine that most members of parliament (as with most members of the community) did not exercise any choice but simply accepted the default, and the default was some middle ground.

Interestingly, at the same time I was speaking this week to John O'Flaherty, the General Manager of Super SA, I was also speaking with the sustainability manager of Westpac Bank, who had come from Victoria to attend the conference. He talked about one of its superannuation products in which the default was the ethical investment option. In other words, if you did not elect a different fund, that was the fund you defaulted to. I think that may be the direction we are heading towards, but for now I am happy for us to take some baby steps. I am not suggesting that the ethical option be the default option: I just want an ethical option to be there.

I do not think that our police should be treated any differently from other public servants, and that is why I moved, in both my private member's bill and in my amendments to superannuation legislation last year (and, I think, the year before), that this option should be made available. I will not repeat what I said last Wednesday but, if members are interested, I urge them to refresh their memory. I talked about client surveys which were conducted by Super SA and which showed that some 30 per cent of those surveyed (and thousands were surveyed) said that they were interested in an ethical investment option.

So, even if you accept the principle that people are freer with words than they are with deeds, and even if that 30 per cent turned into, say, 10 per cent, it would still be a huge uptake of ethical investment. My understanding is that, with most of these public superannuation schemes, something like 5 per cent of people exercise some choice. I am sure that, if an ethical investment option were made available, the percentage would be much higher.

I remind members that, when we last debated this concept, the contributions made were along the lines of, 'Yes; it is inevitable. We will eventually get an ethical superannuation choice. It is just a question of timing.' I am a very patient person. I have tried this before and, if unsuccessful, I will try it again, as it seems that superannuation comes before this place quite frequently.

I do not think that we need to wait. I think that members should accept that society is changing, that its values are changing and that providing an ethical investment option does not mean that you are putting your money into some black hole of debt. The ethical funds have performed very well across the country. We are not talking about giving away our funds: we are talking about investing them in a responsible manner so that they make a profit that is socially responsible. With that brief contribution, I commend my amendment to the committee.

The Hon. P. HOLLOWAY: I thank the Hon. Mark Parnell for his explanation. He probably will not be surprised by the response. His amendment seeks to insert a provision into section 7A of the Southern State Superannuation Act dealing with member contribution accounts. This proposed provision would require the South Australian Superannuation Board to provide members with an option to select an investment choice strategy based on the so-called socially responsible investments. The Hon. Mark Parnell has sought to have similar clauses inserted into superannuation legislation in the past, as he has informed us, and of course, on those occasions, the proposal had been voted down, and the government believes they should be again.

I think it is important to note that the Economic and Finance Committee of the parliament is currently investigating ethical public sector superannuation schemes, and this is based on a House of Assembly motion that was passed on 14 November 2007 and, therefore, until such time as the committee delivers its report, we believe it would be inappropriate for the legislation—

The Hon. S.G. Wade: That's like Glenside. We wait for a parliamentary committee to report.

The Hon. P. HOLLOWAY: Not at all. Until it delivers its report, it would be inappropriate for the legislation to incorporate such an investment option requirement. Unlike the Glenside committee, the Economic and Finance Committee has begun this reference because it is an important issue that is worth examining, but it needs to be examined in significant detail. I am sure that the Hon. Mark Parnell will keep a close eye on the findings of the Economic and Finance Committee, as will the rest of us, I am sure. The government believes it would be better if we were to await the outcome of that before we take any further steps.

The Hon. R.I. LUCAS: In addressing this amendment, I want to divide my comments into two parts. The first part is in relation to my personal views as someone who has some of their money in the Triple S scheme and my personal views about whether I would take up the option if one was available and some of the challenges and problems associated with that. The second issue is more general, which I think the Hon. Mr Parnell has moved towards; that is, whatever your views are, should there be an option for those people who might want to choose an option?

In relation to the first issue, in his contribution the Hon. Mr Parnell has outlined some of the general issues that relate to what he has referred to as 'ethical investment'. I note for the record that what used to be called the Ethical Investment Association has rebadged itself as the Responsible Investment Association Australasia. It has moved away from the notion of 'ethical' to 'responsible' and, in its terms, it takes in a whole range of investment methods, practices and guidelines which include social, ethical and other governance practices and organisations, etc.

As the Hon. Mr Parnell indicated, a variety of mechanisms are used by what he has referred to as ethical investment options or responsible investment options. The association would refer to them as responsible investment options. In brief, they are: negative screening which, as its name implies, means that you ban investment in certain industries such as tobacco; positive screening, where the fund actively seeks out companies which have a positive impact on things such as renewable energy, health care, and above average environmental, ethical and social practices; sustainability analysis, which is detailed quantitative and qualitative analysis of all companies in relation to their environmental, social, ethical and governance performance; and then, in essence, a judgment is made by the fund managers. A variety of research techniques are used, and I will not go through all the details of those.

The Hon. Mr Parnell also referred to the option used by some as 'best of sector' which means that the funds invest in all the investment sectors. They do not negative screen or ban but they try to pick from within the investment sectors the best of the companies that are performing in those industry sectors. There are a variety of others and, for those who are interested, the Responsible Investment Association Australasia website and similar websites outline in some detail the various options and mechanisms that might be available, if an amendment like this were passed and then if Funds SA provided the options.

As I said in the first instance, I wanted to look at some of the challenges in terms of what on the surface of it seems to be a relatively easy and attractive option. I want to quote from a respected financial journalist in Mr James Kirby. He has written a number of books on the financial sector, particularly on superannuation. At the outset—and it will become apparent when I read from his article—he sees himself as an ethical investor. He is not somebody who has not taken up the option; he is somebody who has consciously taken up the option of what he terms 'ethical investment'. His article for the magazine, The Monthly, was published in 2006. It is called 'The myth of ethical investment', and bear in mind that it was written in 2006. He writes:

After a decade-long share-market boom—only marginally clouded by the reversals of early June—ethical investing has moved from the margins to the mainstream. From a standing start in the 1980s the industry has flourished, and today there is at least $7 billion in funds that lay claim to being guided by ethical considerations. But when you get that sort of money washing around, the pioneering idealists that started the industry suddenly face stiff competition. What's more, the working definition of 'ethical' becomes malleable...It's no coincidence that the range of ethical funds is widening dramatically. But are all these funds, well, ethical? If Woolworths' gambling activities—

in an earlier part of the article, he referred to the fact that Woolworths now controls 14,000 poker machines as well as being your local retail outlet of choice—

came as a surprise to you, no doubt it will seem just as odd that some ethical funds have invested in the asbestos company James Hardie and the uranium miner, BHP. It is a problem of definition. For efficiency's sake, commentators like to lump all the ethical-style funds together.

A little further on he states:

Last year, as resource stocks—which are often avoided on environmental grounds by ethical funds—drove the market higher, ethical funds failed to keep pace. The ratings agency Morningstar has said that mainstream funds gained 21.9 per cent, while ethical funds rose by 18.89 per cent. There's the rub: 3 per cent in lost profits. Over the longer term, the news is better. A swag of local and international studies show that ethical investments do not necessarily do better or worse than mainstream funds. In the vernacular of investment management, they are 'cost neutral'. Still, it's surely logical that the more restricted your investment range, the less likely you are to make money.

I interpose at this stage to say that the Responsible Investment Association quotes a recent study that it has done over the past one-year, three-year and five-year ranges which demonstrates, according to its figures, that Responsible Investment funds have actually performed better than the market over the one-year, three-year and five-year period in accordance with its survey. A survey done by AMP Capital Investors (which is one of the particular recommended ethical investment funds) also makes similar claims. So, that is consistent, in part, with what James Kirby is saying, namely that, over the longer term, the news is better, that is, it is around about the same.

As I said, the more recent claims by the Responsible Investment Association based on recent figures is that it has out-performed the market, or mainstream funds as it refers to them. However, back in 1986, James Kirby was referring, I presume, to the 2005-06 figures, which indicated it was being out-performed by the mainstream. So, obviously, that changes and, at this stage anyway, there is no definitive argument one way or another. James Kirby goes on to make the point that, in relation to ethical investment opportunities, if you are in the US or the UK, you have a wide range of options. However, there are slim pickings on Australian funds on the Australian Stock Exchange, because it is a resource laden stock exchange, as he indicates, compared with some of the overseas exchanges. James Kirby further states:

One of the oldest and largest ethical funds on the ASX is Australian Ethical Investment, which has led the pack in banning Woolworths after its move into gambling. But AEI is suffering because of its hardline approach. Many of its rivals are growing faster than it is. While AEI and other traditional funds still espouse such high-minded ideals as 'preservation of endangered ecosystems', newer fund managers such as Ausbil Dexia talk about 'ethical opportunities'. In the battle to gain a few extra percentage points, the ethical war may be lost. James Thier, an Executive Director of AEI, says 'ethical' must always come first, and 'investing' second. 'That's our rule', he explains over (predictably) a soy coffee in a Paddington book shop. Who should we believe? I have my superannuation controlled by the superannuation consultant Mercer, and the whole lot is in 'socially responsible' investments. I signed a form a few years ago and sat back thinking that my nest egg would side step nuclear reactors and godforsaken all-night pokie joints, but has it?

Recently, I rang the Mercer inquiry line and asked what 'socially responsible' actually means: does it exclude nuclear power? A cheery voice at the end of the line said, 'They avoid all that sort of thing'. 'Could you be more specific?' I asked, 'Does it have uranium-mining investments or not?' 'I'll have to refer you to the product disclosure document', came the reply. 'As I thought, sir, it says here the fund will consider issues like you mentioned when it invests'. Yes, but 'consider' is not the same as 'prohibit', is it? I often consider giving up eating meat, but I never do it. I don't want my ethical-investment fund to consider; I want it to decide.

As I said, this comes from someone who has invested and wants to invest in ethical investment and who has written this article in the context of the myth of ethical investment. Many issues, I guess, must be addressed if this is to be an option—well, it already is an option for many companies. As I think the Hon. Mr Parnell indicated (although I am not sure whether he put this figure on the public record), the document from the Responsible Investment Association indicates that over 100 super funds in Australia offer an option that takes environmental and other considerations into account and that it includes eight of Australia's largest 20 super funds, and the document outlines those particular options.

Obviously, a variety of interesting questions need to be resolved if this is to be provided as an option. One has to look at only a couple of the investment options, such as Argo Investments which is an investment powerhouse and which has been very successful over the years in terms of investing in a range of other companies. Now, Argo in and of itself, I would have thought, would have been an ethical investment. However, if it invests in Woolworths or if it invests in a range of options which ethical investors would not want, what do the ethical investor managers do in relation to Argo? Of course, there are literally hundreds of other firms similar to Argo in relation to packaging together investments.

I raise the issue of property trusts and infrastructure groups such as Macquarie and others, where there are investments in property directly and indirectly. If, for example, Macquarie or some of these property trusts are housing pokie palaces, and if you ban Woolworths because it owns gambling institutions, do you similarly ban property trusts or infrastructure groups that in essence are providing the buildings for those investments? I raise the issue of technology companies, because some of the ethical investment funds ban armament or defence-related investments on the basis that anything to do with armaments and war is bad, and therefore do not invest.

In South Australia we would be aware of a company called Vision Systems, which in the end I think was taken over by Tenix. Companies like that invested in technology like radar, which has a variety of uses, but in more recent times, of course, it is very actively used by defence related companies.

Is that an ethical investment in relation to the technology that has been developed? They are difficult decisions for ethical investors. The issue of genetically modified food is something that is obviously strongly opposed by many environmental and social activists. Do ethical investors ban retail outlets, such as Woolworths and Coles, if they stock genetically modified foods? In some other parts of the world supermarket chains are banning, so they say, genetically modified foods within their stores, to get a tick from those who worry about these sorts of issues. The challenge for managers of ethical or responsible investment funds is: do you ban Woolworths, Coles or IGA or anyone, for example, if they are stocking genetically modified foods?

The issues of experimentation on animals is listed by some ethical or responsible investment funds as being a no-no, that is, if a company is associated with experimentation on animals. So what do we say to the perfume outlets and companies like David Jones? Part of their product range is obviously perfumes, some of which may well have been produced (probably would have been done) by using animals, in terms of laboratory research.

The Hon. R.D. Lawson: They sell furs, too.

The Hon. R.I. LUCAS: The Hon. Mr Lawson—ever available for assistance—has suggested some of these stores sell furs and ethically they would be, therefore, frowned upon as well, so there are all those challenging issues.

As I said, one of the popular sustainable funds is the AMP Capital Sustainable Share Fund, AMP Capital Investors. When you go through its list of investments, there is a whole range of property trusts and infrastructure funds, and I have made comments in relation to those. But I did raise by way of interjection when the Hon. Mr Parnell was speaking to the second reading, I think it was—knowing the Hon. Mr Parnell's very strong views on uranium—whether he saw BHP Billiton as an ethical investment. Would this be banned under an ethical investment option?

The Hon. P. Holloway: He has the higher greenhouse option.

The Hon. R.I. LUCAS: I am not sure, because in some of these investments I notice that Babcock & Brown and a number of other power investment companies are listed as investments within the ethical investment option, and I think that, again, some of the responsible investment options would not see that as being acceptable, but nevertheless this very popular one obviously does. In relation to BHP Billiton, it is interesting to have a look at that, because they obviously know that they are on the cusp of a dilemma, because this is what they say. They list all of the products of BHP Billiton: aluminium, coal, copper, iron ore, diamonds, silver, lead, zinc and petroleum—there is no mention of uranium.

Then in the second part of the summary it does say, 'In mid-2005 BHP Billiton completed its takeover of WMC.' It then says that it produces uranium and that the majority of the revenue from the mine is from copper. The mine also produces 11 per cent of the world's uranium, and it represents approximately a third of the world's economic resource. Post the takeover of WMR, BHP Billiton will still be under the fund's uranium/nuclear power exclusion criteria, with 5 per cent of revenue or profit coming from uranium. See the nuclear fuel cycle position paper for more details. Olympic Dam will contribute less than 4 per cent of BHP Billiton's revenue and EBIT, earnings before interest and tax, and revenue from uranium will represent more than 1 per cent of BHP Billiton's total revenue.

There is a further discussion about the problems BHP Billiton has had with the Octedy Mine, for example, in Papua New Guinea in relation to it, but nevertheless with all of that the judgment is that BHP Billiton is an ethical investment and is included within this particular option.

Without going through all of these, members will be pleased to know, obviously there is a number of property trust investments and infrastructure groups, and I have made comments in relation to that. I turn to another general area that I have not addressed and that is, for example, the company Orica. Orica is the world's largest explosive manufacturer and a very good investment, one might suspect, in terms of its financial performance over the past five to 10 years. However, AMP, nevertheless, still sees it as being within its ethical investment options.

The other one I thought that I would note for the sake of the Hon. Mr Parnell, given his interest in this issue and the Hon. Sandra Kanck's, is OneSteel Limited. The Hon. Mr Parnell has expressed strong views about OneSteel.

The Hon. M. Parnell: In terms of the behaviour of a person.

The Hon. R.I. LUCAS: Yes, but this is about behaviour. This is a judgment about ethical investment. I am not talking about the persons here; we are talking about ethical investment, and the Hon. Mr Parnell and the Hon. Sandra Kanck have strongly opposed the environmental practices of OneSteel.

OneSteel Limited, as I said, is one of the more popular ethical investment options included in the ethical investment options. There are many others, but I am not going to delay the debate in the committee stage. However, this whole issue of ethical investment is a bit like the issue—in my humble, personal view—of off setting your carbon footprint. It is very easy to say that someone somewhere will plant enough trees to offset the carbon usage of the Hon. Mr Holloway and his fellow ministers in the cabinet, but who will monitor that those trees actually survive and grow and they have not been sold to 1,000 other people as a carbon offset? One of the dilemmas we are going to face in this whole area is that many of these things which are symbolic sound good and sound easy, but are they going to potentially mislead people in terms of the actuality of what is occurring?

If an investment option is provided and, as I said in the debate two or three years ago, I think it is inevitable, because everyone is providing the option. The Hon. Mr Parnell spoke about this in his second reading contribution, when he quoted my previous contribution that most of the funds are now providing an option on the basis that, if individuals choose to go down this particular path, knowing all of the potential pitfalls, essentially that is an individual choice for those individual members.

As members would gather from what I have just said, if a choice was to be provided in the Triple S scheme at some time in the future I, as an individual member of the scheme, would not head down the responsible investment package and I strongly oppose it being the default option (and I accept the assurance from the Hon. Mark Parnell that that is not part of the package of amendments). As a superannuation investor interested in my future and in the future of my family, I want to maximise the investment and return over the long term and, from a personal perspective, I am more comfortable with the other options that exist within the superannuation fund of which we are committed to being a part.

The second part of my contribution was whether, given our individual views on these issues, we as a state should actually provide the option for those people if they so choose. If the Hon. Mr Parnell, with all those warnings, wants to choose the ethical investment option for himself and his family, should we as a parliament or a state prevent him from making that judgment? The shadow treasurer, the member for Waite, has indicated that we will support the option put by the Hon. Mr Parnell, and he has also indicated (along the lines put by the Hon. Mr Parnell) that these options are widely available to a number of superannuation funds. As long as it is an option that individuals can choose, and no-one is forced to go down that path (and I am sure the honourable member would not be supporting a default option; not that that was discussed or canvassed with him), the shadow treasurer's view is that the Liberal Party will support the amendment moved by the honourable member.

With that, I indicate that at this stage the opposition supports the package of amendments moved by the Hon. Mr Parnell. If, in the passage of the legislation from here to the House of Assembly, the government raises specific drafting issues in relation to these amendments I am sure the shadow treasurer and the Treasurer, in another place, would discuss whether the amendments were consistent with the position the shadow treasurer has outlined of allowing the option to be available to participants of these schemes.

The Hon. P. HOLLOWAY: I am really disappointed, and I guess we will see where the numbers lie in a moment. It is not so much whether or not one should have a so-called ethical option in relation to super schemes. That is not the issue. There are two comments I should make. First, it will apply only to police. If we are going to do this, it should be done across the board to all schemes. The amendment requires Super SA to make a scheme available. Since the Economic and Finance Committee of the parliament is currently investigating these schemes, would it not be better that the parliament decides the basis of it? The Hon. Rob Lucas highlighted at great length the issues involved in this matter. What is ethical to some people will not be ethical to others.

The Hon. R.I. Lucas interjecting:

The Hon. P. HOLLOWAY: If as a parliament we require Super SA to develop one of these schemes, would it not be better that the parliament, through the committee that has been underway for four or five months, await the report of the committee in order to get a direction for the way in which we are going? I agree with the Hon. Rob Lucas: I think it is inevitable that we will have these schemes. If we are going to establish them, let us at least get a basis on which to do it; let us at least have the parliament play some role.

The committee might have government control but, on an issue such as this, I am sure all the members of the committee, including members of the opposition, would be making a contribution; and that is the way it should be. It would be most regrettable if the Legislative Council were to wipe it out by saying, 'We will totally ignore that and use our basic numbers to impose this system without doing the work.' I appeal to Independent members. It is probably inevitable that we will get one of these schemes, but let us do it properly. If we are going to do this, let us have it across the board, not for just one individual scheme. A number of other schemes would not have the option. More importantly, we need to give guidance as to how such a scheme should operate.

The Hon. R.I. Lucas interjecting:

The Hon. P. HOLLOWAY: What will happen is that a lot of amendments will come back to say, 'We need to exclude this company and that company,' and we will have to do all the work which the Economic and Finance Committee is now doing properly. We have been setting up select committees on everything. A committee has been working on this issue for five months, but we are going to say, 'Let's ignore it. We will override it and make its work irrelevant.'

The Hon. S.G. Wade interjecting:

The Hon. P. HOLLOWAY: On the contrary, the decision is already made. You are double guessing it. There is absolutely no comparison whatsoever. However, if that is the wish of the committee, so be it, but I suggest that it will reflect, yet again, on the capacity of this place, not on the merits of the argument.

The Hon. M. PARNELL: I would say at this stage that I am delighted that the opposition has seen fit to support this amendment.

The Hon. R.I. Lucas interjecting:

The Hon. M. PARNELL: I must say that, until towards the end of the Hon. Rob Lucas' contribution, I was unsure where he was heading with it. He has pointed out that there are difficult issues that need to be resolved. The simple fact of the matter is that, whilst we can make a mountain of difficulties that seem insurmountable, they are not insurmountable. If 12 of the top 20 superannuation funds have been able to offer this option and if the governments of Queensland and Western Australia have been able to offer this option to their public servants, it is not too hard.

As the Hon. Rob Lucas has said, the decision is not going to be one made by the parliament in terms of which companies are in and which companies are out. Whether it is the 'best in show' model that was referred to, or some other model, there are reputable, professional fund managers out there making these judgment calls.

The Hon. Rob Lucas reminded me of an interjection he made when he asked me whether I thought a particular company qualified as an ethical investment. I did not respond at the time to his interjection, because interjections are out of order, as you frequently tells us, Mr Chairman. But my answer is: if there were two identical funds and one did not hold tobacco shares, that fund would be preferable over the one that did.

It is at the margins in many cases that we are looking at this because, of course, we can always find in every company, as we can in every individual, inconsistencies and things that we do not necessarily approve of. Life is just like that. No-one is perfect, and no company is perfect.

What I think is at the heart of this amendment is that neither we in this parliament nor our hardworking police officers, who are the subject of this bill, should feel embarrassed about holding values other than the simple economic bottom line. They should not be embarrassed about having values that it is not just the rate of return, even though, as the Hon. Rob Lucas pointed out, there are statistics that show that the rate of return might be a little lower or a little higher, or maybe it is the same. The point is that these funds exist; they are profitable and viable, and people elect to go into them because they believe that there is some part of their value system that is better served by having this type of option, rather than just having an option that has no responsible or ethical, or however you like to frame it, filter attached.

It is also important to point out to members that I am not suggesting that such a fund would be the default. I just mentioned that in passing, because that is the direction some places are heading. I am inviting us, through this amendment, to take that very small step of saying that, if you are going to offer choices in relation to investment, make one of them a socially responsible investment choice. No-one is going to be compelled to go into it.

The Hon. Rob Lucas will take great comfort that his money will be where he elects to put it, and he will not be forced to adopt any of the moral positions or ethical stances. That is completely irrelevant. What we are saying is that, just like all people in the community outside the public sector who have superannuation choice, let us give our hardworking public servants and our police officers the ability to have that choice as well.

I want to respond quickly to the minister's suggestion that, because there is a reference to one of the standing committees of parliament (the Economic and Finance Committee), that should be a natural break on us considering this option. I do not believe that it should be a break. My understanding is that that particular committee has a great deal on its agenda. I do not believe that this inquiry has any great level of priority.

At the end of the day, it is a very simple matter for me: these funds exist; they are profitable; they are in the general finance community; and they are in the Public Service arrangements of other states. So, I am saying: let us learn from other states' experience; let us copy the best of the other states' legislation. We have spent time today talking about taking legislation from other states that might not work so well, so let us take one that does work well. Two states, at least, have adopted it and others are looking at it.

I thank the members of the Liberal Party for their support, and I now turn to my crossbench colleagues and urge them to support this motion as well. The minister said that it might seem not quite right to be just giving it to police through this amendment, but we will have the opportunity very soon, on a private member's day coming up, to apply these very same standards to the rest of the public sector.

As I said, these provisions are identical to the ones that I have proposed for the Triple S scheme members. I pulled this one out of that private member's bill because I wanted to deal with it as part of the government's agenda, because it brought this police superannuation legislation before us. Now is an appropriate time for us to be dealing with it. This is really a bit of a test for whether or not all our public servants will eventually get this ethical super choice. I urge all honourable members to support this important amendment.

The Hon. R.I. LUCAS: Is the minister's advice that, if the amendments are passed as a package, it will apply to all public servants in the Triple S scheme?

The Hon. P. HOLLOWAY: Yes—just the Triple S scheme. It clearly would not include the PSS3 scheme, for example, which is the parliamentary scheme, but it would apply to the earlier scheme that the honourable member and I are in.

The Hon. R.I. LUCAS: I am more interested in the Triple S scheme as it applies to the wider public sector. Is the answer to that yes?

The Hon. P. HOLLOWAY: Yes.

The Hon. R.I. LUCAS: I want to clarify that, because my reading of the amendments is that this was an amendment to the Southern State Superannuation Scheme (the Triple S scheme) and, therefore, would apply to all public servants who are members of the Triple S scheme, not just police officers who are members of the Triple S scheme. So, I think we need to bear that in mind. I think what the minister is saying is that, potentially, there is a group of members of parliament who might not be—

The Hon. P. HOLLOWAY: The Hon. Mark Parnell.

The Hon. R.I. LUCAS: The Hon. Mark Parnell has deliberately excluded himself from having this option through his amendments. I am surprised that he would try to slip that one through without our realising that. We did not pick it up. If, indeed, that was the case, I suspect that the Hon. Mr Parnell might want to move an amendment to cover that. It seems the government's advice is that maybe the scheme that the Hon. Mr Parnell is in, and the more recent members of parliament—

An honourable member interjecting:

The Hon. R.I. LUCAS: And the Hon. Mr Finnigan, I am sure, would be interested in ethical investment. I am not sure what the Hon. Mr Parnell wants to do in relation to that.

Certainly, as I have indicated, we are happy to support the amendments but, if there is a glitch or an anomaly, I would not want to leave the Hon. Mr Parnell in the position where I could go out publicly and accuse him of providing an option for everyone else but cleverly ensuring that he does not have to take up this option for himself. I am sure that was not his intention.

The Hon. M. PARNELL: I wish to respond to what the honourable member has just said. He has alerted me to something of which I was not necessarily aware. The process that I went through was to draft an omnibus ethical superannuation bill that would cover all public servants. I took advice from parliamentary counsel to extract the bits that related to this government amendment, primarily dealing with police superannuation.

I would be keen to strike while the iron is hot and pass these amendments now. If it turns out that there is some unintended consequence or, for some reason, they do not do all that I expect, then I would think that between the houses we will hear back from the government. However, I wish to put on the record that any consequence that might result from this—that I am unable to take advantage of it, whereas others are—is unintended. I will seek to remedy it very soon and, if I bring my private member's bill on with all haste, that might quickly redress that situation.

I thank the honourable member for pointing out his view that that might be the result, but I think that I will proceed with the amendments as drafted for today, and we will deal with any problems. There may not be any problems; it may be that the honourable member is wrong. I will discuss it with parliamentary counsel later, and we will see whether anything needs to be fixed.

The Hon. P. HOLLOWAY: In fairness to the Hon. Mark Parnell, he would not have been able to amend the parliamentary superannuation scheme because it comes under a different act—the PSS3 scheme. He might have been able to do it, but he would probably have to have a resolution at the second reading stage. In fairness to him, the Hon. Mark Parnell has done all that he can within the terms of this bill.

The Hon. R.I. Lucas interjecting:

The Hon. P. HOLLOWAY: Yes, well, I think I have said enough.

The committee divided on the new clause:

AYES (10)

NOES (9)

Majority of 1 for the ayes.

New clause thus inserted.

Clauses 33 to 43 passed.

New clause 43A.

The Hon. M. PARNELL: As I said at the outset, all of my amendments effectively relate to this same issue. I move:

Page 16, after line 25—

After clause 43 insert:

43A—Amendment of section 26E—Accretions to spouse members' accounts

Section 26E—after subsection (3) insert:

(3a) If spouse members are permitted by the board to nominate a class or combination of classes of investments, the option of nominating a class of investments based on consideration of the impact of the investments on society and the environment must be made available to spouse members (subject to terms and conditions determined by the board).

I urge members to support this for the reasons we have been discussing.

The Hon. P. HOLLOWAY: We will not bother to re-fight the argument. I just want to put on the record that, in reality, what will probably happen is that, given that the number of people who may take up these sorts of packages is likely to be fairly small, one would expect that Funds SA would probably be more likely to buy an investment package, if you like, in relation to this, rather than create one itself. If it were to do so, of course, those costs would have to be passed on to the members of the fund, and that would not be fair if there was a very small number of them. They are likely to buy a package and, of course, the dilemma—

The Hon. R.I. Lucas interjecting:

The Hon. P. HOLLOWAY: This is obviously the issue that we are coming to: if they do buy a package presumably we are then going to have arguments and, I suppose, before long, we are going to have amendments coming back, no doubt, from the Hon. Mark Parnell saying, 'Because they've got these companies and so on, we really need to develop our own package, or change the thing,' and so on. That, I guess, is where the debate goes from here. We will not waste any more time on the matter.

New clause inserted.

Clause 44 passed.

Clause 45.

The Hon. M. PARNELL: I move:

Page 15, after line 34—

After subclause (2) insert:

(2a) Section 27—after subsection (4) insert:

(4a) If members are permitted by the board to nominate a class or combination of classes of investments, the option of nominating a class of investments based on consideration of the impact of the investments on society and the environment must be made available to members (subject to terms and conditions determined by the board).

This is, again, in the same terms as the previous amendments.

Amendment carried; clause as amended passed.

New clauses 45A and 45B.

The Hon. M. PARNELL: I move:

Page 17, after line 2—

After clause 45 insert:

45A—Amendment of section 30A—Transition to retirement

(1) Section 30A(7)—delete "The investment" and substitute:

Subject to subsection (7a), the investment

(2) Section 30A—after subsection (7) insert:

(7a) The investment of a draw down benefit under subsection (4)(b)(i) must, if the member so requests, be based on consideration of the impact of the investment on society and the environment (subject to terms and conditions determined by the board).

45B—Amendment of section 30B—Early access to superannuation benefits

(1) Section 30B(8)—delete "An investment" and substitute:

Subject to subsection (8a), an investment

(2) Section 30B—after subsection (8) insert:

(8a) An investment under subsection (7) must, if the member so requests, be based on consideration of the impact of the investment on society and the environment (subject to terms and conditions determined by the board).

Again, these are consequential; it is the same subject.

New clauses inserted.

Clauses 46 to 51 passed.

New clause 51A.

The Hon. M. PARNELL: I move:

Page 17, after line 37—After clause 52 insert:

51A—Amendment of section 47B—Post retirement investment

Section 47B—after subsection (4) insert:

(4a) Despite subsections (2) and (3)(a), the investment of money accepted by the Board under subsection (1) must, if the investor so requests, be based on consideration of the impact of the investment on society and the environment (subject to terms and conditions determined by the Board).

This amendment relates to the same matter we have been discussing.

New clause inserted.

Clause 52, schedule and title passed.

Bill reported with amendments.

Third Reading

Bill read a third time and passed.