The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, today welcomed Labor’s support for strengthening the governance arrangements for the boards of Australia’s $2.1 trillion superannuation sector.
During Senate Estimates today, Labor’s spokeswoman on financial services, Senator Katy Gallagher, conceded that “good governance is good governance is good governance” while querying the need for separate APRA prudential standards for the governance of superannuation funds versus other APRA-regulated institutions.
It is clear that Senator Gallagher believes that there is no rationale for having different governance standards for different types of APRA-regulated institutions – which is an important principle of the Government’s superannuation accountability reforms.
“It has been put to me that you seem to be accepting one standard for banks and insurers and another for the superannuation industry, and good governance is good governance is good governance isn’t it?” – Senator Katy Gallagher, Senate Estimates, 2 March 2017.
The laws governing the superannuation sector were designed by a former Labor government and enshrine an inferior governance model with no requirement for independence on the boards of union-backed superannuation funds. The SIS Act restricts APRA’s ability to prescribe consistent standards of governance, including independence on boards, for all APRA-regulated institutions.
As a result of the SIS Act, APRA’s Superannuation Prudential Standard (SPS510) is unable to require independent directors on superannuation trustee boards, whereas the Combined Prudential Standard (CPS510), which applies to deposit-taking, general insurance and life insurance institutions, mandates that these institutions must have a majority of independent directors and an independent chair on their boards.
“Labor commissioned a report into the superannuation industry in 2010 that put forward a case for higher standards of governance,” Minister O’Dwyer said.
“It is good news that Labor now appears to agree with its own inquiry.”
The Turnbull Government will progress legislation through the Parliament to require more independent directors and strengthen the accountability of superannuation fund boards.
The Government welcomes Senator Gallagher’s concession on this important principle, which is widely recognised as “Governance 101”.