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Fraser review sets the stage for Senate showdown over super governance

Super governance reforms will run the Senate crossbench gauntlet.

Super governance reforms will run the Senate crossbench gauntlet. Photo: AAP

Former Reserve Bank of Australia governor Bernie Fraser has set the stage for a Senate showdown after rejecting calls for the mandatory appointment of independent directors to the boards of not-for-profit (NFP) superannuation funds.

Mr Fraser said the case for the move had “not been adequately made”.

Thursday’s release of the long-awaited Fraser review, commissioned by Industry Super Australia and the Australian Institute of Superannuation Trustees, drew a sharp response from the government.

First commissioned in late 2015, it followed the introduction to Parliament of a bill that would force NFP super fund boards to populate one-third of their boards with independent directors. Currently, industry super fund boards must have equal representation from the union and employer group movements which established the funds in the first place.

Bernie Fraser says the case for board change has not been made adequately. Photo: AAP

Bernie Fraser says the case for board change has not been made adequately. Photo: AAP

The first bill foundered on the shoals of the independent-controlled Senate when it was opposed by crossbenchers including John Madigan, Glenn Lazarus, Nick Xenophon and Jacqui Lambie.

Financial Services Minister Kelly O’Dwyer went on the attack on Thursday saying the industry funds movement had initiated the review “as a delaying tactic to stop reforms to superannuation governance that have been in the pipeline since 2010″.

“There is nothing in this report that negates the need for legislation to lift the standard of accountability, transparency and choice across the entire superannuation sector,” Ms O’Dwyer said. 

In his report, Mr Fraser said “many of these arguments for mandated minimum numbers of independents rely heavily upon assertion, rather than reason and evidence. Sadly, this has come to characterise so much public policy ‘debate’ in this Age of Assertion”.

Mr Fraser said the consistent outperformance of NFP funds showed their governance model “was not broken”. The sector had also not been plagued by the scandals that had hit the bank-owned sector, he said.

“The net returns to members of NFP funds – collectively and separately – have consistently and significantly exceeded returns to members of retail funds.”

Source: Fraser review

Source: Fraser review

A spokesman for Ms O’Dwyer said the government had not yet decided when legislation on independent directors for super funds would be reintroduced. The previous bill lapsed when the election was called last year after opposition from the crossbenchers dissuaded the government from taking it to a Senate vote.

It now looks even more difficult for the government to win passage of the legislation. Since senators Rod Culleton (former One Nation) and Bob Day (Family First) were forced out of Parliament, Labor and the Greens would only need four crossbenchers to block any new legislation.

Rebekha Sharkie (R), from the Nick Xenophon Team, was elected to the House of Representative. Photo: ABC

The Xenophon Team may be changing its mind. Photo: ABC

The crossbenches now consist of three Nick Xenophon Team representatives, three from Pauline Hanson’s One Nation, along with senators Jacqui Lambie, David Leyonhjelm and Derryn Hinch. Given senators Xenophon and Lambie opposed the legislation last time, its passage would seem problematic now.

However, one parliamentary insider told The New Daily that the Xenophon Team vote was now less certain following a political campaign waged against him by building unions following a change of position to pass the Australian Building and Construction Commission legislation late last year.

ISA public affairs director David Whiteley said following the Fraser review “the government would be better off focusing on the 2.4 million Australians who have not been paid superannuation entitlements”.

These workers are owed a total of $3.6 billion, research from ISA showed.

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