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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-06-04 Daily Xml
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STATUTES AMENDMENT (ETHICAL INVESTMENT—STATE SUPERANNUATION) BILL

Committee Stage

In committee.

Clauses 1 to 3 passed.

Clause 4.

The Hon. D.G.E. HOOD: This is a test amendment. I have a series of amendments, as members can see, but they are all essentially the same amendment. As I said in my second reading speech, Family First is supportive of this measure. However, we have had some thoughts on it. This amendment is very simple. Basically, it seeks to expand in some ways the proposal in the bill introduced by the Hon. Mark Parnell in such a way as to incorporate issues of conscience—specifically, to include the words 'issues of conscience generally recognised within the community'.

A very simple explanation of that is that in the United States, for example, there are some ethical super funds—and I am not aware of one in South Australia at this stage but there are some in other states—that specifically preclude investing in companies that make money out of pornography, for example. It could be argued—and maybe the Hon. Mark Parnell will do this—that the bill without the amendment would already cater for that but, to us, that was not clear enough, hence the amendment. We are targeting that as one example.

By voting for this amendment, members will be agreeing that the ethical investment that has been made will also consider issues such as investing in companies, for example, that produce pornography or other material which people in the community may find offensive or distasteful. I certainly do not want my superannuation going to prop up companies that produce such material, hence the amendment. With those few words, I move:

Page 3, lines 12 and 13 [clause 4, inserted paragraph (b)]—

Delete all words in these lines after 'consideration of' in line 12 and substitute:

—

(a) the impact of the investments on society and the environment; or

(b) issues of conscience generally recognised within the community.

The Hon. M. PARNELL: I support the amendment, but I do so with the comment that I believe that the result that the honourable member seeks could have been achieved anyway without the amendment. I understand that what he is seeking to do is to obtain clarity, and that is fine, so I will support the amendment. It seems to me that including the concept of 'issues of conscience generally recognised within the community' would fall within the subset of the words in my current bill which are 'the impact of the investments on society', because issues of conscience relate to people in their own right but more commonly in connection with their view of society and how a proper society should run. I think it is unnecessary, but it does no harm, and I am happy to have it incorporated. Having said that, I would urge the mover to consider that, even though it is my bill and I am supporting it, if he does not have the support of the council for this amendment, he can still consider supporting the bill in its unamended form.

It is certainly my understanding and my intention that the words I have in there in relation to ethical investment, in terms of the impact of investments on society, would be broad enough. It would probably not be helpful to go down every rabbit burrow to try to use every little example. We saw a little bit of that in the second reading. Clearly, every individual has a different view on what is ethical, what is an adverse impact on society and what is an adverse impact on the environment.

The Hon. Rob Lucas, at some length, went through the different types of ethical investment products and how they deal with it: whether they try to exclude certain types of investment, whether they deliberately try to include other types of investment or whether they take a middle approach, which might be to take a best of sector approach—maybe they will take the best uranium mining company. I personally would probably not invest my funds in an ethical investment company where that was their approach, but it is an approach that some people take.

I was very pleased to spend some time this last week with Mr James Thier, the director of Australian Ethical Investment, and I discussed with him in general terms what it is that I was trying to achieve with this legislation. I mentioned to him, in a general sense, that an amendment in relation to issues of conscience was one that had been put. He expressed no great alarm that that would undermine the intent of the scheme.

The way this will operate in practice, as I see it, is that Super SA or Funds SA will go into the marketplace and they will purchase, off the shelf, an ethical investment product and then offer that to members. I reiterate that my bill does not make it mandatory or obligatory for any particular person to sign up to any particular ethical investment fund. It basically says: 'If we are going to have choices, let one of them be this choice', and I think that that is the way to go.

I am not going to speak at any great length because we have had the second reading, not just on this bill but I would remind members that we tested this at some length in relation to a government bill on police superannuation. The outcome of that debate was that a majority of this council supported an incorporation of ethical investment in relation to police. The bill also dealt with the Triple S scheme, so even though we were talking about police we, in fact, have already extended this scheme to more public servants.

With the assistance of parliamentary counsel, the effect of this bill is basically to tidy up the remnants, to make the situation that we have agreed should apply to police apply to all public servants and all members of parliament, so that those people have a choice in relation to ethical investment. I am not aware of any circumstances that have changed since we debated the police superannuation bill, and I am hoping that the support that my amendments had in that case will be reflected in general support for this bill, but for now I am happy to support the honourable member's amendment to my bill.

The Hon. CARMEL ZOLLO: If I could place on the record, as was done by the Hon. Paul Holloway, and reiterate that the government will not be supporting this bill. The government's view is that the introduction of such an option as outlined in the amendment should be done in harmony with the existing requirements of Funds SA, namely, to achieve the highest return possible and have proper regard for the need to maintain the risks relating to investments at an acceptable level.

Again, the potential increased costs from such an investment option conflicts with the existing requirements of Funds SA. There also needs to be appropriate consultation, which is very important, and communication with the relevant superannuation boards. I know that the Hon. Paul Holloway has already placed those comments on the record but I believe it is important to reiterate them.

The Hon. R.I. LUCAS: My question is to the mover of the amendment. Does the form of the words that he seeks to include in the legislation, or similar words, appear in schemes interstate or, indeed, elsewhere? Through my limited knowledge of the area as a result of having looked at it in connection with the police superannuation bill, I am certainly aware of drafting which includes the sort of drafting the Hon. Mr Parnell has used (society and the environment) and I think I agree with him that it probably does encompass many of the issues in question.

The Hon. Mr Hood refers to perhaps the safest area of the issues of conscience in pornography, but there are many vexed issues of conscience, for example, abortion, various drugs that pharmaceutical companies might use to either hasten (or whatever) fertilisation, fertility drugs and those things which may well be issues of conscience for the Hon. Mr Hood and the Hon. Mr Evans but which may not be issues of concern to others. I understand why he has only highlighted pornography, because it is relatively safe ground about which to have an argument or debate and it is not a vexed issue. My question to the Hon. Mr Hood would be: is he aware of whether or not similar words and phrases are used in legislation governing ethical investment in other states and territories?

The Hon. D.G.E. HOOD: The short answer is no, I am not aware of other state legislation using that language. The briefing we gave to parliamentary counsel in deriving the amendment, if you like, was specifically to exclude pornography. We used that one example, and this was the wording which was returned to us and which we accepted in good faith.

The reason we chose to go further than the wording as originally existed from the Hon. Mark Parnell is quite simply that most of the current ethical investment products out there, so-called, do have a strong focus on environmental concerns. We do not disagree with that at all; in fact, we commend the people concerned for having that focus, but in some cases they do not consider what we have called here issues of conscience, and that is investing in places that make money out of pornography, for example. In the United States, they have several of those options. They exist in other states, but I am not sure of the wording.

The Hon. R.I. LUCAS: As I said, there are some vexed issues and questions in relation to the relatively safe ground of pornography. For example, some members of parliament may well see some of the offerings on commercial or publicly paid television late in the evening and the early hours of the morning that are tantamount to soft core or hard core pornography, depending on their point of view. They certainly incorporate full-frontal nudity, simulated or actual sex acts and a whole variety of other things which, in previous years, many people would have comfortably described as pornography; whether or not they still do is really up to the individual.

Therefore, if you say, 'Okay, we're sure about an investment in Channel 9 or the media company that produces Big Brother,' does that company produce pornography? Is that an ethical investment? As I said, whilst it is a relatively safe area to identify, I highlight that, clearly, there are such questions in relation to ethical investment or issues of conscience, as proposed by the Hon. Mr Hood.

A number of these companies would not exist without funding sources. The only way some of these companies survive is through a funding mechanism. In that way, are you indirectly supporting ethical investment by supporting a particular bank or financial institution that has a preponderance of lending to the areas such as media and perhaps soft core pornography or the companies that produce Big Brother and those sorts of things (and I am not suggesting that that is soft core pornography, but others might)? If a member has significant shares in banks or financial institutions, are they doing so through that mechanism? There are ethical investment issues in relation to that.

The position of the Liberal Party is that the joint party room has not addressed the issue of the Hon. Mr Hood's amendments, so we are in a little bit of a cleft stick. Rightly, the Hon. Mr Parnell wants to proceed to a vote today. The position of the joint party room has been to support the legislation as it was (and I have spoken on that on behalf of the party on a previous occasion), and I am therefore not armed at the moment with authority from the joint party room either to oppose or support.

In stating that today, I am not indicating that the party, if and when we have to consider this at another stage, might not support the sorts of amendments the honourable member suggests. I can speak personally and say that I suspect that, in any party room debate, I would probably have some difficulty in moving down the path the Hon. Mr Hood wants to move down. That is a personal view, and I do not wish it necessarily to reflect the party view, which may well be different. I would be happy to accept the party decision if that were ultimately the case on the issue.

Therefore, as we sit today, with the bill to go through, I am not in a position to support it and, reluctantly at this stage anyway, on behalf of the party I do not support the amendments moved by the Hon. Mr Hood. However, as I said, I do so on the basis that the party room has not considered and rejected them; although it may well, on a future occasion, if we are asked to debate them on this legislation or, indeed, on any other legislation, ultimately choose to determine that. It really is in the hands of the shadow treasurer and the shadow minister for finance, and I do not have a position from them or the party room in relation to these amendments.

For those reasons, as we are required to vote on the amendments, I indicate on this occasion that, on behalf of the party, I will not be supporting the package being moved by the Hon. Mr Hood.

The Hon. D.G.E. HOOD: I have some brief comments. I thank the Hon. Mr Lucas for his comments, and I think that is understood. In order to clarify the intention, and in relation to the comments concerning investment in banking organisations, for example, that is certainly not the intention of this amendment. If somebody wants to invest in a bank, and that bank chooses to lend its money to organisations that pursue things that people may not want them to pursue, you have to draw a line somewhere

I do not think that, as an individual investor, one can be responsible for the indirect consequences of their investment, unless they had some prior knowledge of that. That certainly was not the intention. I certainly consider banks a very ethical investment; in fact, I have direct investments with the major banks at the moment, and I have to say that I am copping a flogging on them. However, I am hopeful that they will turn.

I have moved the amendment, although it seems that it will be defeated. So be it, but I want to clarify that the intention was really to prevent direct investment in organisations that produce pornography.

Amendment negatived; clause passed.

The CHAIRMAN: Does the Hon. Mr Hood intend to proceed with his other amendments?

The Hon. D.G.E. HOOD: No; they are consequential. Despite the fact that my amendments will clearly be defeated, Family First will still support the Hon. Mr Parnell's bill.

Remaining clauses (5 to 13) and title passed.

Bill reported without amendment.

Third Reading

The council divided on the third reading:

AYES (10)

Darley, J.A. Evans, A.L. Hood, D.G.E.
Kanck, S.M. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Parnell, M. (teller) Stephens, T.J.
Wade, S.G.

NOES (5)

Gago, G.E. Gazzola, J.M. Holloway, P.
Hunter, I.K. Zollo, C. (teller)

PAIRS (4)

Dawkins, J.S.L. Finnigan, B.V.
Schaefer, C.V. Wortley, R.P.


Majority of 5 for the ayes.

Third reading thus carried.

Bill passed.

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