Legislative Council: Wednesday, November 13, 2013

Contents

PUBLIC CORPORATIONS (SUBSIDIARIES) AMENDMENT BILL

Second Reading

Second reading.

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (12:59): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This Bill seeks to make amendments to the Public Corporations Act 1993.

The 'Southern Select Super Corporation' was established as a subsidiary of the Minister for Finance pursuant to the Public Corporations (Southern Select Super Corporation) Regulations 2012 and is the trustee of Super SA Select, the State Government's taxed superannuation scheme. There is currently no external independent dispute mechanism in respect of the decisions of the board of directors of the Southern Select Super Corporation. This is because the Public Corporations Act 1993 does not provide for the regulations establishing a subsidiary of a public corporation to confer jurisdiction on a court to review a decision of that subsidiary.

It is imperative that current and former members of superannuation schemes have access to an appropriate external dispute resolution process as a means of resolving complaints with fund trustees as quickly as possible, in a fair and economical way. It is also important to note that in terms of the external dispute mechanism for the main State Government superannuation schemes, the Southern State Superannuation Act 2009, the Superannuation Act 1988 and the Police Superannuation Act 1990 currently confer jurisdiction on the Administrative and Disciplinary Division of the District Court with respect to the decisions of the Super SA Board and Police Superannuation Board.

Therefore, the legislation contained in this Bill, if enacted, will enable regulations establishing a subsidiary of a public corporation to confer jurisdiction on a court to review decisions or activities of that subsidiary. This amendment will enable a consequential amendment to be made to the Public Corporations (Southern Select Super Corporation) Regulations 2012 to provide specifically for the Administrative and Disciplinary Division of the District Court to hear an appeal against a decision of the Southern Select Super Corporation.

The other issue covered by this Bill relates to the Schedule to the Public Corporations Act 1993, which sets out the provisions applicable to subsidiaries. Clause 2 provides that a subsidiary is subject to the control and direction of its parent corporation. As a result, it follows that the Southern Select Super Corporation is subject to the control and direction of the Minister for Finance, as the parent corporation. However, there are two main problems with this provision in the context of a subsidiary with a trustee role. Firstly, in terms of trustee duties, the trustee will commit a breach of trust if it fails to exercise honestly its judgement as to whether it should do a particular act or not. Having regard to this principle, it is inappropriate for a trustee to be subject to control and direction of its parent in respect of its trustee functions. This is because a direction could place the trustee in a conflicted situation where compliance with that direction could result in it breaching its trust obligations. Secondly, the direction and control of a parent corporation over the decisions of a subsidiary with trustee functions is not consistent with Commonwealth superannuation legislation, which provides that the governing rules of a superannuation entity must not render the trustee subject to the direction of a third party.

The Bill therefore seeks to amend clause 2 of the Schedule to the Public Corporations Act 1993 to clarify that even though a subsidiary is subject to the direction and control of the board of its parent corporation, such direction and control will not apply in relation to the performance of that subsidiary's functions as a trustee (if any). The intention of the amendment is not to remove general oversight of, or accountability to, the parent corporation in respect of decisions of subsidiaries, but to ensure that where a subsidiary makes decisions in the capacity of trustee, the subsidiary is not bound to follow a direction but can exercise those trustee functions independently. Such a limited power of control and direction appears in other legislation, including section 6 of the Public Trustee Act 1995 and section 21 of the Superannuation Funds Management Corporation of South Australia Act 1995.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

The Bill does not include a commencement clause and will therefore come into operation on the day that it is assented to by the Governor (in accordance with section 7(1) of the Acts Interpretation Act 1915).

Part 2—Amendment of Public Corporations Act 1993

3—Amendment of section 24—Formation of subsidiary by regulation

Section 24 of the Public Corporations Act 1993 provides for the establishment by regulation of bodies corporate as subsidiaries of public corporations. This clause amends subsection (2) of section 24 so that regulations establishing a subsidiary may confer jurisdiction on a court to review decisions or activities of the subsidiary.

4—Amendment of Schedule—Provisions applicable to subsidiaries

The Schedule sets out provisions applicable to bodies established by regulation as subsidiaries of public corporations. Clause 2 of the Schedule provides that a subsidiary is subject to control and direction by the board of its parent corporation. Under clause 2 as amended by this clause, if a subsidiary is to perform functions as a trustee, it will not be subject to control or direction in relation to the performance of those functions.

Debate adjourned on motion of Hon. J.M.A. Lensink.