Superannuation Funds Management Corporation of South Australia (Investment in Russian Assets) Amendment Bill

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. K.J. MAHER (Minister for Aboriginal Affairs, Attorney-General, Minister for Industrial Relations and Public Sector) (16:53): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading them.

Leave granted.

The horrors that continue to be visited upon the people of Ukraine continue to splash across our headlines, but the sheer scale of the human cost is difficult to even comprehend.

The events perpetrated by Russian aggression has resulted in the loss of thousands of lives and precipitated a humanitarian crisis with approximately 7.1 million Ukrainians internally displaced whilst over five million people have fled to neighbouring countries.

According to the United Nations as of late April 2022, Poland has taken in almost three million refugees alone from Ukraine.

Over ten million people have been forced to leave their homes to seek safety. These numbers are hard to even imagine: this is the fastest and largest displacement of people in Europe since World War 2, and the horrors are far from over.

Most countries around the world have imposed tough economic sanctions on Russia to respond to their acts of aggression. This has included the banning of new investments in Russia, freezing the assets of Russian banks, and sanctioning Russian financial institutions.

Australia has joined this chorus of international condemnation and has prohibited the import of oil, refined petroleum products, natural gas, coal and other energy products from Russia, as well as prohibiting the supply, sale or transfer of certain luxury goods.

These actions, carried out in concert with the international community, is putting powerful economic pressure on President Putin and his indefensible war of conquest.

However, the current war in Ukraine and resulting Russian sanctions have highlighted that the current Act does not have a mechanism by which Funds SA can be directed by the government to divest Russian investments.

This is an immediate issue that requires a focussed response.

During the 2022 State Election campaign the Opposition, under the now-Premier's leadership, committed to amending the Superannuation Funds Management Corporation of South Australia Act 1995 to enable Ministerial discretion to enable the removal of state government funds from Russian assets.

When the now-Premier made this promise, there was a suggestion from others this was all too hard.

He made the point at the time: 'When you get elected to Premier, you get elected with an extraordinary amount of authority and the idea of the job is to use that authority consistent with a set of principles that you believe to be right'.

He promised that if he were elected Premier, when Parliament resumes, he'd be walking in with a piece of legislation to fix it.

And here we are.

There is a clear and urgent need to ensure that Australians are not inadvertently helping to fund Russian aggression through their retirement savings.

As such, these amendments will feed into a process that is already under way. Funds SA has already divested itself of over $50 million in Russian assets. But given the ongoing sanctions against Russia, divesting these assets without incurring significant losses will take time. There are still an estimated $9 million worth of investments to address, almost all of which are held indirectly.

There is a clear need to enable a direction by the Minister to Funds SA for the divestment of remaining Russian assets. Once Funds SA is directed to divest Russian assets, actions taken by the Corporation to fulfill this direction should be in line with their fiduciary duties.

These amendments have been made in consultation with the Board and Management of Funds SA, who have flagged their concerns about the impact on investment returns and potential conflict with the terms outlined in the Heads of Government Agreement.

The proposed Bill addresses these concerns, and the amendments contained in this Bill will enable this divestment to occur in a sensible manner that specifically targets Russian held investments without breaching the principles of trustee governance under the Superannuation Industry (Supervision) Act of 1993.

These amendments are limited, targeted and seek to close a loophole in the existing legislation in order to strengthen our response to Russian aggression and reaffirms our support for the people of Ukraine in their times of trial.

These amendments to the legislation enable us as a Government to do what the public rightly expect of us.

I seek leave to have the explanation of clauses inserted into Hansard without my reading it.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

This clause provides that the measure will come into operation on a day to be fixed by proclamation.

Part 2—Amendment of Superannuation Funds Management Corporation of South Australia Act 1995

3—Amendment of section 21—Direction of Minister

Section 21 of the Act as proposed to be amended by this clause will provide that a Ministerial direction given to the Superannuation Funds Management Corporation of South Australia may include a direction in relation to divestment of Russian assets. Action taken by the Corporation in accordance with such a direction is to be taken prudently and consistently with the Corporation's responsibilities. There is also a requirement for annual review of the new provisions and for a report of the review to be provided to the Minister and included in the Corporation's annual report.

Debate adjourned on motion of Hon. L.A. Curran.