Bills

Statutes Amendment (Fund Selection and Other Superannuation Matters) Bill

Second Reading

Adjourned debate on second reading.

(Continued from the 16 March 2021.)

The Hon. J.A. DARLEY (16:16): I rise to speak on the Statutes Amendment (Fund Selection and Other Superannuation Matters) Bill. I support the additional choice and portability these provisions provide to public sector employees. The bill is supported by several large public sector unions and associations: the Public Service Association, the Australian Nursing and Midwifery Federation and the Australian Education Union.

In any altered superannuation arrangements, the government should ensure that advice is provided to all public sector employees so that individuals make sound and informed decisions in their own best interests. The status of Triple S as a constitutionally protected fund (CPF) has significant tax benefits for members. It is important that the CPF status of Triple S is maintained and protected. It is understood that the Super SA Board sought and obtained legal advice that these amendments will not put the CPF in further jeopardy. It is incumbent on present and future state governments to keep this status and not trade it away, so that existing public sector employees' benefits are kept. I support the government's bill.

The Hon. R.I. LUCAS (Treasurer) (16:17): It is with pleasure that I rise to conclude the second reading debate of the bill. In doing so, I want to thank my very good friends and comrades, the union bosses, who lead the public sector unions in South Australia: the PSA, the nurses' federation, the Australian Education Union and other public sector unions, but the first three were the main ones that were engaged in terms of discussion. As I said, whilst we occasionally differ in the public arena in relation to matters, nevertheless, on issues like this that are of mutual importance to both members of the public sector unions and the government, we work collaboratively and cordially together.

I think, as I indicated in very good humour, I had a gang of union bosses in my office only last week, and we enjoyed some merriment at my flattering description of them as union bosses. As I said to them, I saw it as a term of endearment because I saw bosses as a good thing, and I was just unsure as to how they would see it as anything other than a term of endearment that I would refer to them as union bosses. But seriously, in relation to this we have worked productively with the representatives of various unions.

I also acknowledge and thank the Hon. Ms Bonaros for her very active engagement in this particular role and her patience. A couple of years ago now, she moved a bill in this chamber, which made it even more difficult because we got advice that it really needed to be moved in the House of Assembly because of the nature of the issues that had to be resolved.

It has morphed from a matter of choice to be now a limited public offer, to allow a further degree of optionality for Super SA, so that it can attract people who are working in both the public and the private sector, for example as nurses or teachers, to be able to, if they were previously investing in a private superannuation fund, also invest in a public sector superannuation fund.

There have been further developments, but nevertheless I pay tribute to the fact that the Hon. Ms Bonaros moved the original bill but was also, as I said, prepared to be patient and accept the fact that government was supportive of the proposition. At the outset, I said it was more complicated than we thought, and as the two years went on it was much more complicated than we thought, not just because we added a limited public offer.

Even at the very end of the day, in the latter weeks, the Police Association took a different position because they have extraordinarily complicated insurance arrangements. Whilst they were initially sympathetic, in the end their advice was that they preferred to maintain the current arrangements, and we were prepared to accommodate that in particular.

As I said, whilst I said to the Hon. Ms Bonaros at the outset that this was going to be much more complicated than originally outlined, it ended up being much more complicated than certainly even I envisaged. Nevertheless, as complicated as it was, it was worth the effort of working together. The Hon. Ms Bonaros was prepared not to push ahead with forcing a vote on her bill and preferred to see what I think she has acknowledged is a more comprehensive package now and one which, because the public sector unions have supported it, embraces broad support from the public sector unions in relation to the optionality.

I also want to thank the hardworking officers within Super SA. It has been a complicated process for us. It has been their responsibility, together with parliamentary counsel and others, to resolve some of these complications, to engage in the negotiations with the public sector unions and ultimately to advise me and my officers in terms of the details of the legislation. So I thank also the hardworking staff within Super SA in relation to their contribution to what we would hope is going to be the speedy passage of the bill this afternoon.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. K.J. MAHER: I have just a few questions that relate to the overall scheme as it currently operates and how it might be changed, which I suspect might most easily and appropriately be reflected upon on in clause 1. Firstly, can the Treasurer explain what legal instrument confers the tax-free status of South Australia's public sector superannuation funds?

The Hon. R.I. LUCAS: I am advised they have an exemption under the commonwealth tax act.

The Hon. K.J. MAHER: Is it part of the legislation itself, or is it a schedule to regulations that confers this tax-free status?

The Hon. R.I. LUCAS: I am advised it is a schedule to the regulations.

The Hon. K.J. MAHER: Does it follow, then, that it can be changed via a regulatory instrument at the federal level—that is, by, essentially, an executive act of the federal government rather than a legislative change from the federal parliament?

The Hon. R.I. LUCAS: Yes, but of course that would be subject to potential disallowance by either house of the federal parliament.

The Hon. K.J. MAHER: Is it the case that it is completely out of the hands of the government of South Australia or the Parliament of South Australia as to whether this tax-free status is maintained?

The Hon. R.I. LUCAS: It is exactly the same as it has been for decades, I suppose—that is, there has been, as there is in many areas, an understanding between both the federal government and the state government that this is not an issue the federal government would act on without the agreement of the state government. So the answer to the question is: as with many things, if the federal parliament decides to either legislate and/or regulate, it has enormous powers to do all sorts of things which might be contrary to the interests of individual states.

The Hon. K.J. MAHER: Without the change that is being proposed by the legislation which we are debating, could the federal government make this change by regulation?

The Hon. R.I. LUCAS: The federal government already has the power, and it could have done it at any stage, and with or without this particular bill it has the same power.

The Hon. K.J. MAHER: Just to be very clear, is the Treasurer advising the chamber that the passage of this legislation will in no way affect what is required by the federal government should they choose to change the tax-free status—just to be abundantly clear?

The Hon. R.I. LUCAS: That is our advice. As I understand it, that has been provided to various members of the opposition in the briefings.

The Hon. K.J. MAHER: Does the Treasurer have a figure on, approximately—if it was changed—what the implication would be for South Australia's public sector superannuation?

The Hon. R.I. LUCAS: No, we have not even contemplated that particular set of circumstances. There has been no suggestion from anyone that we need to.

The Hon. K.J. MAHER: Is the Treasurer able to confirm that the Super SA Board considered and approved the future outsourcing of its insurance services, in his many discussions that he gleefully outlined with leaders of unions?

The Hon. R.I. LUCAS: My understanding is there has been no decision taken by the Super SA Board. They certainly always look at their insurance arrangements in terms of how they might be improved. I am sure there have been plenty of discussions over a period of time in relation to how that can be improved, but something like that, I suspect, would probably have to eventually come to me; it eventually has to come to me for approval.

I think I might have indicated this at the estimates committee last year when it was asked, that ultimately whatever the views are of Super SA on these sorts of issues, on that particular issue it would need to come to me and then ultimately, possibly, to cabinet for approval. It has certainly not come to me for approval or to cabinet for approval.

The Hon. K.J. MAHER: Again, just for the sake of clarity, is the Treasurer aware of any current discussions by Super SA or any potential or actual recommendations in relation to the future outsourcing of insurance services?

The Hon. R.I. LUCAS: I am aware that Super SA is currently and always has been looking at how it might improve its insurance services. Why? Because there is a lot of criticism from public sector members about the quality of insurance services that are being provided. Certainly, in the discussions I have had with representatives of Super SA, I have indicated to them that they need to have a look at the quality of the services they provide across the board, in particular in relation to insurance.

Can I hasten to say that, as much as I would like to have an extended discussion about insurance, this is not actually a bill about insurance. The estimates committee and question time and other useful fora within the parliament can be usefully explored. I was happy to answer a series of questions, but I am not going to spend an inordinate amount of time in the committee stage of the superannuation bill on something which is actually not in it.

The Hon. K.J. MAHER: I will leave it at a final question I have on this whole bill. In relation to Super SA and the potential insurance services, is it fair to say that the Treasurer is predisposed to approving the outsourcing of such insurance services?

The Hon. R.I. LUCAS: Say again, please?

The Hon. K.J. MAHER: Is it fair to say that you are predisposed to the outsourcing of such insurance services? This will be the last one.

The Hon. R.I. LUCAS: I am not predisposed to anything. If a sound case is made for a proposition I am always prepared to consider it, but my advice in relation to this particular area is that ultimately it would have to go to cabinet. I am a mere one member of the cabinet and if it has to go to cabinet it would not only be my predisposition, to use the word the member has used, it would also require the view of the cabinet.

As I said, I am aware that Super SA has been doing a considerable amount of work in relation to the quality of the service and I am sure they have been looking at a range of options in relation to the quality of the service. In the recent discussions I have had with Super SA I have indicated that, under whatever the current arrangements are, they ought to be looking at improving the quality of the service to meet some of the criticisms they are receiving from public sector members about the quality of the insurance product they offer.

Finally, one of the issues that will need to be considered by Super SA, and indeed a treasurer or a cabinet, is the capacity of Super SA to provide the sort of detailed and complex insurance advice that has been provided and will need to be provided in the future.

Clause passed.

Clauses 2 to 6 passed.

Clause 7.

The Hon. R.I. LUCAS: I move:

Amendment No 1 [Treasurer–1]—

Page 5, line 23 [clause 7, inserted subsection (2)(b)(ii)]—Delete 'the person's selected fund' and substitute 'a complying superannuation fund (within the meaning of Part 3A)'

This is a consequential amendment to proposed section 19(2)(b)(ii) to reflect that membership in Triple S will cease where a member exercises full portability and rolls over their entire accrued balance to a complying superannuation fund, rather than just their selected fund as initially proposed under part 3A.

Amendment carried; clause as amended passed.

Clause 8.

The Hon. R.I. LUCAS: I move:

Amendment No 2 [Treasurer–1]—

Page 5, lines 34 and 35 [clause 8(2), inserted paragraph (b)(ii)]—Delete '—to the selected fund' and substitute:

in their capacity as a police member—to the fund selected for the purposes of that fund selection

This amendment is that fund selection for police members is limited under the bill to Super SA Select, Super SA's tax fund. This amendment complements this rule to clarify for the avoidance of doubt that police members are required to make their compulsory contributions under section 21B to the Treasurer or to Super SA Select if they have made a fund selection to that fund, even if they have also made a fund selection to another fund in respect of other government employment that they may have.

Amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 3 [Treasurer–1]—

Page 6, line 9 [clause 8(3), inserted subsection (1b)(a)]—After 'subsection (1)(a) or (b)' insert:

as a deduction from the salary received by the member from the employer to which the fund selection relates

Members who make a fund selection are precluded under proposed section 21B of the bill from making contributions to the Treasurer as a deduction from salary and must instead make such contributions to their selected fund. This amendment clarifies in proposed section 21B that such a person may make a contribution to the Treasurer, i.e. after tax contribution, in respect of salary being paid by any other government employer they may have who is still making employer contributions to Triple S.

Amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 4 [Treasurer–1]—

Page 6, lines 15 and 16 [clause 8(4)]—Delete subclause (4) and substitute:

(4) Section 20(2)(b)—delete paragraph (b) and substitute:

(b) require specified members, or members of a specified class, to make contributions as a deduction from salary at a prescribed rate—

(i) to the Treasurer; or

(ii) if the member has made 1 or more fund selections—

(A) to a fund selected by the member for the purposes of a fund selection; or

(B) if the regulations so require, to a fund specified in the regulations,

(and a regulation under this paragraph may prescribe different rates or specify different funds in respect of different members or different classes of member); or

This amends the regulation-making power in section 20(2)(b) of the act to clarify the same issue as for amendment No. 2 but in respect of those who are prescribed by regulation to make compulsory contributions, i.e. operational ambulance members. In other words, compulsory contributions are required to be made to Triple S or Super SA Select, even if they have another fund selection in play for another government employer.

Amendment carried; clause as amended passed.

Clause 9 passed.

Clause 10.

The Hon. R.I. LUCAS: I move:

Amendment No 1 [Treasurer–2]—

Page 8, lines 26 and 27 [clause 10, inserted section 21A, definition of existing member]—Delete the definition

Amendment No 2 [Treasurer–2]—

Page 8, lines 29 and 30 [clause 10, inserted section 21A, definition of new member]—Delete the definition

These amendments remove the definition of 'existing member' and 'new member', as they are specific to the seven-day rule for new members, which proposed amendment No. 13 seeks to remove for simplification of administration.

Suggested amendments carried.

The Hon. R.I. LUCAS: I move:

Amendment No 3 [Treasurer–2]—

Page 8, lines 33 to 35 [clause 8, inserted section 21A, definition of selected fund]—

Delete 'the fund specified by the person in the fund selection notice given to the person's employer' and substitute 'a fund specified by the person in a fund selection notice given to an employer of the person'

This is a technical amendment to clarify that where a person has multiple government employers, the fund selection regime applies separately in relation to each individual government employer.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 4 [Treasurer–2]—

Page 10, line 5 [clause 10, inserted section 21C(1)(a)]—Delete 'the person's employer' and substitute 'an employer of the person'

Amendment No 5 [Treasurer–2]—

Page 10, line 16 [clause 10, inserted section 21C(3)]—Delete 'the person's employer' and substitute 'an employer of the person'

These are technical amendments to clarify that where a person has multiple government employers, the fund selection regime applies separately in relation to each individual government employer.

Suggested amendments carried.

The Hon. R.I. LUCAS: I move:

Amendment No 6 [Treasurer–2]—

Page 10, after line 27 [clause 10, inserted section 21C]—After subsection (5) insert:

(5a) If a notice given by a person to their employer for the purposes of making a fund selection does not comply with all requirements under this section, the employer may nevertheless accept the notice if satisfied (whether on receipt of the notice or after consultation with the person) that it complies substantially with those requirements, and, in that case—

(a) the notice will be taken to be a fund selection notice; and

(b) the person will be taken to have given a valid direction under subsection (3).

This introduces a new subsection (5a) into section 21C to clarify that invalid fund selection notices will still be treated as valid if the employer is satisfied, or becomes satisfied, that they are substantially correct.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 7 [Treasurer–2]—

Page 10, line 28 [clause 10, inserted section 21C(6)]—After 'fund selection' insert 'in respect of a particular employer'

Amendment No 8 [Treasurer–2]—

Page 10, line 29 [clause 10, inserted section 21C(6)]—Delete 'their' and substitute 'that'

These amend proposed section 21C(6) to clarify that, where a person has multiple government employers, the fund selection regime applies separately to each government employer.

Suggested amendments carried.

The Hon. R.I. LUCAS: I move:

Amendment No 9 [Treasurer–2]—

Page 10, line 31 [clause 10, inserted section 21C(7)]—Delete 'in relation to a person' insert 'for a person in respect of a particular employer of the person'

This amends proposed section 21C(7) for the same reason as amendments Nos 7 and 8.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 10 [Treasurer–2]—

Page 11, lines 16 and 17 [clause 10, inserted section 21D(2)]—Delete 'the member's selected fund' and substitute:

a complying fund (which, in the case of a designated member, must be the eligible fund selected by the member in their capacity as a designated member)

Section 21D(2) of the bill permits those members who make a fund selection to exercise full portability, i.e. roll over their entire accrued balance to cease membership of Triple S. This amendment clarifies that, subject to amendment No. 11, a member of Triple S but not a prescribed member, who has made a fund selection, may exercise full portability to any complying fund, not just the selected fund, and ensures that prescribed members—i.e. police and ambulance members and described as designated members in the bill—may exercise full portability only to Super SA Select, being the only fund they can choose for a fund selection under the bill.

This is consistent with the current rights they have to join Super SA Select. They may, however, exercise partial portability to any complying fund under the existing provisions of the bill, subject to a minimum amount being retained in Triple S or Super SA Select, as the case may be.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 11 [Treasurer–2]—

Page 11, after line 21 [clause 10, inserted section 21D(2)]—After paragraph (b) insert 'or'

(c) another employer of the member is required to make contributions to the Treasurer on behalf of the member under section 21.

This amendment clarifies that for a person who has multiple government employers but has not made a fund selection in respect of all such employers full portability will not be permitted. This is because closure of membership is a consequence of full portability, which is not possible where other government employers are still contributing to Triple S. Transfers will instead be limited to partial portability under the existing provisions of the bill.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 12 [Treasurer–2]—

Page 11, line 28 [clause 10, inserted section 21D(4)]—Delete 'subsection (2)' and substitute 'section 19(2)(b)'

This is a technical amendment only by which the number of the subsection is corrected.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 13 [Treasurer–2]—

Page 11, lines 30 to 42 and page 12, lines 1 to 15 [clause 10, inserted section 21D(5) to (8)]—Delete subsections (5) to (8) and substitute:

(5) If a member makes a fund selection, the member's employer must commence making contributions required under section 21 to the member's selected fund within 2 months, or such other period as may be prescribed by regulation, following the day on which the fund selection notice is received by the employer.

(6) The regulations may prescribe variations or additions to the procedure set out in subsection (5) (and any such regulation has effect according to its terms).

This amendment removes the requirement in sections 21D(5) and (6) of the bill for members who commence government employment after the commencement of the bill to make a fund selection within seven days, with a six-month restriction if they do not. This has essentially been removed for ease of administration and means that the same fund selection process will apply for all members, new and existing.

This also makes a technical amendment to existing subsection (8), now (5), to clarify that employers must commence making contributions to the chosen fund within two months of receipt of the fund selection notice in respect of all members who make a fund selection and not just existing members.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 14 [Treasurer–2]—

Page 12, line 31 [clause 10, inserted section 21E(1)(b)]—Delete 'is a new member' and substitute 'becomes a member of the Triple S scheme after the commencement of this Part'

This amendment is formal. It deletes the superseded definition of a new member and clarifies that the requirement to provide a form upon the commencement of new public sector employment applies with effect from the commencement date of the bill.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 15 [Treasurer–2]—

Page 12, line 34 [clause 10, inserted section 21E(1)(c)]—Delete 'not' and substitute 'no longer'

Amendment No 16 [Treasurer–2]—

Page 12, lines 35 and 36 [clause 10, inserted section 21E(1)(c)]—Delete '(whether the person is a new member or an existing member)'

Amendment No 17 [Treasurer–2]—

Page 12, line 37 [clause 10, inserted section 21E(1)(c)]—Delete 'not' and substitute 'no longer'

These are technical amendments to clarify that an employer is required to give a member a replacement fund selection form upon learning that their selected fund is no longer able to accept contributions or is otherwise no longer an eligible fund. The deletion of the references to new members and existing members is formal and consequential to amendment No. 13.

Suggested amendments carried.

The Hon. R.I. LUCAS: I move:

Amendment No 18 [Treasurer–2]—

Page 13, lines 13 to 29 [clause 10, inserted section 21G]—Delete the section

This amendment removes proposed section 21G, which provided for a fund selection to continue seamlessly upon change of government employer; however, this is not possible to administer, having regard to the different payroll systems in government. In addition, it is not in members' best interests for the new employer to automatically determine or assume that they want their fund selection to continue for the new employer. They will instead be given a new fund selection form upon commencement of employment to confirm their intention regarding fund selection.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move:

Amendment No 19 [Treasurer–2]—

Page 14, line 5 [clause 10, inserted section 21H(3)(a)]—Delete 'section 21D' and substitute 'section 19(2)(b)'

This is a technical amendment only by which the number of the subsection is corrected.

Suggested amendment carried; clause as suggested to be amended passed.

Clause 11.

The Hon. R.I. LUCAS: I move:

Amendment No 5 [Treasurer–1]—

Page 14, line 27 [clause 11(1), inserted text]—Delete 'to the Treasurer'

This clause is formal. It is a technical amendment to remove the reference to contributions being made to the Treasurer. This is necessary because a government employer of a person in respect of whom section 24 of the Triple S act applies will not be making contributions to the Treasurer. If the member has made a fund selection, that will instead be contributing to the selected fund.

Amendment carried; clause as amended passed.

Remaining clauses (12 to 18) and title passed.

Bill reported with amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (16:45): I move:

That this bill be now read a third time.

The Hon. C. BONAROS (16:46): Very briefly, I would just like to place on the record again my sincere thanks, firstly, to the Treasurer for seeing this issue through. I have not at any time had reason to question his commitment to this cause, and I have been extremely grateful for the regular updates he has given us to get us to this point. There is absolutely no question that it has been an extremely complicated piece of legislation, as it turns out.

Nothing about this final bill has been easy, but, true to his word, the Treasurer has seen it through to the end for the very simple reason, as he articulated several times now, that, as we know, Super SA is fully supportive. They have done a mountain of work on this proposal to get us to this point. The Public Service staff impacted by super choice are supportive, the unions are supportive; everyone is supportive because it is a no-brainer.

I am extremely grateful, firstly, to the Treasurer for sticking to his word and getting this bill through but also to those hardworking people at Super SA who have committed so much time and work to this project. In particular, I thank Ms Bennett and her team and Mr Patrick McAvaney. I thank them all for their work, and again I commend the government for seeing this bill through to its final passage through this place.

Bill read a third time and passed.