|
Mr MIKE BAIRD (Manly) [9.50 p.m.]: I lead for the Opposition on the Superannuation Administration Amendment (Chief Executive) Bill 2008. At the outset I say that the concept of paying a market rate to attract experts to critical roles of government is something that the Opposition is very supportive of. However, at this point the Opposition opposes this bill for a number of reasons. The Opposition believes it is poor principle to have a single piece of legislation for a single appointment. It also understands that the bill requires the State to pay a salary that exceeds the current maximum for chief executive officers, but it is not a cost issue. The Opposition supports paying the market rate but it thinks it should be done under the current existing terms and conditions in place to enable such appointments.
Currently the chief executive officer of the SAS Trustee Corporation [STC], known as State Super, is employed under terms and conditions set by the Chief Executive Service under the Public Sector Employment and Management Act 2002. However, the object of this legislation is to enable the chief executive officer of State Super to be appointed by the STC Board on terms and conditions set by the board, with the approval from the Minister. To achieve this objective, schedule 1 to the bill amends the Superannuation Administration Act 1996 and schedule 2 amends the Public Sector Employment and Management Act 2002.
I will look at the background. The Chief Executive Service and the Senior Executive Service were established in the New South Wales public sector in 1989. They include eight remuneration levels that are set by the Statutory and Other Officers Remuneration Tribunal, known affectionately as SOORT. Within those levels the maximum package allowed is $428,900 with allowances, or close enough to $450,000. The remuneration levels are reviewed annually and were last increased on 1 October this year with the chief executive officer level rising by 5.3 per cent.
The Opposition's main concern is that SOORT can make special determinations on issues referred by the Minister. I look forward to hearing the Minister's response to that issue. Within that context we would assume that an issue referred by a Minister would cover contexts such as total remuneration packages for critical executives at critical times. Certainly that is where we see this appointment at this particular point. Another concern is that the bill effectively takes this one appointment of the chief executive officer of State Super out of the hands of SOORT and it becomes the only job that is effectively removed from SOORT's hands. It provides the opportunity for effectively unchecked ministerial appointment on any terms determined appropriate by a small group of people. Now one piece of legislation for one appointment, in any parlance, has to be viewed as inefficient, messy and not necessarily a good rule to follow. Certainly in human resources parlance a HR structure is never performed around a single person. We should certainly not have a single piece of legislation for one person; our entire public service comprises more than 300,000 people.
The Opposition supports the market rate. The bill will enable salary to be offered above the current maximum of approximately $450,000 and, unlike other issues, this is not a cost issue. The Opposition supports market-based pay. It supports employing the best people from the market. However, its strong stance is that it should be determined within the existing framework. SOORT has a mechanism for special determinations. Why is SOORT not being utilised for this appointment? Why at 10.00 p.m. on the Tuesday of the last sitting week of the year are we trying to pass legislation for a particular appointment?
The Opposition understands the importance of the chief executive officer position. The chief executive officer has responsibility for managing an investment portfolio of all public servants of a huge amount of money. It is approximately $34.2 billion. Over the past 12 months, while the position has been vacant, the value of superannuation has been collapsing. The Opposition drives home that criticism to the Government.
First State Super losses of 6.8 per cent as at year end were higher than the industry average and equivalent at that time to the funds under management of almost $1 billion. In comparison in the same climate the Future Fund of $63 billion lost a mere 1.81 per cent—markedly less. The concerns of collapsing values in State Super funds are coupled with the unfunded superannuation increasing by $7 billion, which has also significantly increased. The mini-budget detailed that we have collapsing values and a huge ballooning future superannuation liability obligation. And we do not have a chief executive officer in place. The question is: Why has it taken 12 months to secure such a role at such a critical time? The Government's failure to attract and recruit someone into this position has a substantial impact on the super of the State's public sector workers.
I have no idea why the Government decided not to put any increased contributions to the ballooning unfunded superannuation liabilities in the mini-budget. I believe we will be debating the mini-budget tonight, so maybe we can look at it in more detail then. Not only do public servants have the problem of their super significantly reducing in value at the moment, but also future obligations are increasing and we are not doing anything to mitigate that concern. The Opposition believes that the Government has let down front-line workers—teachers, police officers, nurses and fire fighters—because their super has been let to diminish in value without anyone overseeing it and being recruited into this role of chief executive officer to drive this process. This has been described as a once-in-a-century crisis. In such a crisis we need the best possible management team in place to address the concerns and guide us through stormy water. Who knows what would have happened if a chief executive officer had been effectively in place, regardless of who was in the position? For 12 months the position has been sought to be filled—so there must be a temporary appointment. We need someone there securely making long-term decisions at this critical juncture.
If a basic investment profile is used with a mix of Australian equities and international equities, using the Dow Jones Index as a comparator for international indices, this week 12 months ago when we started to look to fill this position the All Ordinaries Index was 6,419.6. Last week the All Ordinaries opened at 3,397—that is a fall of 47 per cent in equity value. The Dow Jones, using that as an international comparator, a year ago this week was 12,980 points. Last week the most recent close was 8,048—a fall of 38 per cent. If those two falls are averaged, it is close enough to 42 or 43 per cent. It means we have potentially lost, if that was the investment profile pursued, $6.45 billion in superannuation values. Clearly, we do not know the exact number but we know that many billions of dollars have been lost in State Super funds while we have been searching and trying to recruit a chief executive officer for this critical job at this critical time.
The Opposition opposes this bill and condemns the Government for failing to recruit a chief executive officer to State Super for more than 12 months. There could not have been a worst possible time to dither in relation to securing a top executive. The Opposition has said that from its reading SOORT certainly has all the mechanisms to make special determinations. Clearly, this should have been it. Where was the Premier? Why did he not inject himself into this appointment process?
How can we be in a position where every single public servant's superannuation is at risk at the most volatile time in the history of recorded superannuation? There is no chief executive officer. Meanwhile, the Future Fund, with a sound management structure in place, has lost 1.8 per cent, but we have lost potentially billions of dollars while waiting for this recruitment to occur.
The Opposition does not oppose paying market rates to attract the appropriate person to this important position. That amount needs to be paid. However, we do not understand why the tribunal has not supported it, and we do not understand why the Premier has not intervened to make it happen. At the same time, we support an independent tribunal process that has access to market figures and is a mechanism for Ministers to ensure that the best possible people are in the best jobs. We urge the Government to make this appointment. As we wait, the superannuation of all public servants continues to be at risk until that appointment is made.
|
