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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
COMSUPER BILL 2011
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Finance and Deregulation,
Senator The Honourable Penny Wong)
Glossary
The following abbreviations and acronyms are used in this Explanatory
Memorandum.
Abbreviation/acronym Definition
1
1922 scheme the scheme established under the Superannuation
Act 1922
Act ComSuper Act 2011 as passed by the Parliament
Bill ComSuper Bill 2011
CEO Chief Executive Officer
CRF Consolidated Revenue Fund
CSC Commonwealth Superannuation Corporation
CSS Commonwealth Superannuation Scheme
Defence Minister Minister for Defence
DFRB Defence Forces Retirement Benefits Scheme
DFRDB Defence Force Retirement and Death Benefits
Scheme
DFSPB Defence Force (Superannuation) (Productivity
Benefit) Scheme
FMA Act Financial Management and Accountability Act
1997
Minister Minister for Finance and Deregulation
MSB Military Superannuation and Benefits Scheme
PNG the scheme provided for by regulations made
under the Papua New Guinea (Staffing
Assistance) Act 1973
PSS Public Sector Superannuation Scheme
PSSAP Public Sector Superannuation Accumulation Plan
2
Outline
The ComSuper Bill 2011 (the Bill) will establish ComSuper as a statutory agency for
the purposes of the Public Service Act 1999, consisting of a Chief Executive Officer
(CEO) and staff. The CEO, an independent statutory officeholder, will be the head of
ComSuper. ComSuper will also be a prescribed agency for the purposes of the
Financial Management and Accountability Act 1997 (FMA Act), and that Act will
apply to the operations of the agency.
The Bill is part of a package of three Bills giving effect to Government decisions in
2008 and 2009 to modernise Australian Government superannuation and establish
governance arrangements for the Commonwealth superannuation schemes that are
effective and consistent with the broader superannuation industry. The other two Bills
in the package are:
· the Governance of Australian Government Superannuation Schemes Bill 2011
(the Governance Bill), which merges the Australian Reward Investment Alliance,
the Military Superannuation and Benefits Board and the Defence Force
Retirement and Death Benefits Authority to form a single trustee body from
1 July 2011
· the Superannuation Legislation (Consequential Amendments and Transitional
Provisions) Bill 2011, which contains the consequential and transitional
provisions necessary to facilitate the merger, the changes to superannuation
administration and the modernisation of specific aspects of Australian
Government superannuation to align with the broader superannuation industry.
The function of the CEO is to provide administrative services to the Commonwealth
Superannuation Corporation (CSC), which will be established as the trustee of the
main Australian Government civilian and military superannuation schemes by the
Governance of Australian Government Superannuation Schemes Bill 2011. The CEO
is not subject to ministerial direction in the performance of this statutory function.
The CEO will be subject to any reasonable direction from CSC regarding the
administrative services and will be required to comply, where possible, with any
policies, guidelines and standards regarding administrative services determined by
CSC. This provides a capacity for CSC to influence the quality of administrative
services and priorities underpinning those services. This recognises that CSC is
responsible for the general administration of each superannuation Act, and therefore
each superannuation scheme, for which it has legislative responsibility.
Consequently, it is envisaged that the CEO will work in partnership with CSC to
ensure administrative services are delivered efficiently and effectively.
However, the CEO is a statutory officeholder and has other functions that are
specified in Commonwealth laws. This includes satisfying any requirements imposed
on Agency Heads by the Public Service Act 1999 and compliance with the
requirements of the FMA Act when dealing with public money and public property.
The CEO and CSC will need to take these obligations into account when establishing
service standards and assessing the quality of the services that are provided.
In practice, this means that the CEO would operate on the basis that CSC is the client
to which the CEO provides administrative services. This is in the context that the
Commonwealth sets the overarching policy and legislative framework for both the
CEO and CSC, as well as the broader framework in which statutory bodies, such as
the CEO and CSC, operate.
The CEO will provide administrative services to CSC in relation to the following
superannuation schemes:
· the scheme established under the Superannuation Act 1922 (1922 scheme)
· the Commonwealth Superannuation Scheme (CSS)
· the Public Sector Superannuation Scheme (PSS)
· the Public Sector Superannuation Accumulation Plan (PSSAP)
· the Military Superannuation and Benefits Scheme (MSB)
· the Defence Force Retirement and Death Benefits Scheme (DFRDB)
· the Defence Forces Retirement Benefits Scheme (DFRB)
· the Defence Force (Superannuation) (Productivity Benefit) Scheme (DFSPB)
· the scheme provided for under the Papua New Guinea (Staffing Assistance)
Act 1973 (PNG).
The CEO will be appointed on a full-time basis by the Minister and his or her
remuneration will be determined by the Remuneration Tribunal.
The function of the staff of ComSuper will be to assist the CEO in the performance of
his or her functions. The staff are to be engaged under the Public Service Act 1999.
The Bill commences on 1 July 2011.
Financial Impact Statement
The Bill has no financial impact.
4
COMSUPER BILL 2011
NOTES ON CLAUSES
PART 1--PRELIMINARY
Clause 1 - Short title
Clause 1 is a formal provision that the Bill, once enacted, may be referred to as the
ComSuper Act 2011.
Note: The clauses in the Bill will become sections of the Act on Royal Assent.
Clause 2 - Commencement
2. Clause 2 provides that Sections 1 and 2 of the Bill will commence on Royal
Assent, with the remaining clauses commencing upon commencement of the
Governance Bill. It is proposed that the Governance Bill will commence on
1 July 2011.
Clause 3 - Definitions
3. Clause 3 sets out definitions of terms that are relied on in other provisions
throughout the Bill. These definitions are the following:
· CEO means the Chief Executive Officer of ComSuper. This office is
established under clause 7 of the Bill and the functions and powers of the CEO
are set out in clause 8
· CSC has the same meaning as in the Governance Bill. It is short for the
Commonwealth Superannuation Corporation, and refers to the body corporate to
be continued in existence under clause 5 of that Bill
· ComSuper means the body established under clause 4 of the Bill
· Defence Minister means the Minister responsible for the Defence Act 1903
· governing deed has the same meaning as in the Governance Bill. Under that
Bill, governing deed refers to the Trust Deed within the meanings of the
Military Superannuation and Benefits Act 1991, the Superannuation Act 1990
and the Superannuation Act 2005 respectively
· modifications includes additions, omissions and substitutions. This definition is
relied on in subclause 8(6)
· PSSAP has the same meaning as in the Superannuation Act 2005. It is short for
the Public Sector Superannuation Accumulation Plan. That Act defines PSSAP
as the scheme established under the Trust Deed made under that Act
· superannuation scheme administered by CSC has the same meaning as in the
Governance Bill. Under that Bill, this term refers to:
- the scheme established under the Superannuation Act 1922
(1922 scheme)
- CSS (short for Commonwealth Superannuation Scheme) as defined in the
Superannuation Act 1976
- DFRB (short for Defence Forces Retirement Benefits Scheme), which is the
scheme provided for by the Defence Forces Retirement Benefits Act 1948
- DFRDB (short for Defence Force Retirement and Death Benefits Scheme),
which is the scheme provided for by the Defence Force Retirement and
Death Benefits Act 1973
- DFSPB (short for Defence Force (Superannuation) (Productivity Benefit)
Scheme) which is the scheme provided for under a determination made
under Part IIIAA of the Defence Act 1903
- MSB (short for Military Superannuation and Benefits Scheme) as defined in
the Military Superannuation and Benefits Act 1991
- PSS (short for Public Sector Superannuation Scheme) as defined in the
Superannuation Act 1990
- PSSAP (short for Public Sector Superannuation Accumulation Plan ) as
defined in the Superannuation Act 2005
- PNG (short for the Papua New Guinea Superannuation Scheme), which is the
superannuation scheme established by regulations made under the Papua
New Guinea (Staffing Assistance) Act 1973.
PART 2--COMSUPER
Clause 4 - Establishment
4. Clause 4 establishes ComSuper.
Clause 5 - Constitution
5. Clause 5 provides that ComSuper consists of the CEO and the staff of
ComSuper.
6. The note to this clause makes it clear that ComSuper does not have a separate
legal identity to that of the Commonwealth. However, ComSuper will be a prescribed
agency for the purposes of the FMA Act. As a prescribed agency, ComSuper will be
financially autonomous from the Department of Finance and Deregulation under the
FMA Act for the proper management of public money and public property within its
control or custody.
7. The office of CEO is established by clause 7 and provisions relating to the role
and appointment of the CEO are provided at Divisions 1 to 3 of Part 3 of the Bill.
Clause 6 - Function
8. Clause 6 provides that ComSuper's function is to assist the CEO in the
performance of the CEO's function. The CEO's function is specified in clause 8.
6
PART 3--CHIEF EXECUTIVE OFFICER, STAFF AND
CONSULTANTS
Division 1--Function and powers of the CEO
Clause 7 - Chief Executive Officer
9. Subclause 7(1) provides that there is to be a CEO of ComSuper. The CEO is
a statutory officeholder.
10. Subclause 7(2) provides that the CEO is not an officer within the meaning of
the Commonwealth Authorities and Companies Act 1997. The purpose of this
provision is to make it clear that the CEO is not a director or senior manager of any
Commonwealth authority as defined in that Act, including CSC.
Clause 8 - Function and powers of the CEO
11. Clause 8 sets out the function and powers of the CEO.
12. Subclause 8(1) provides that the CEO's function is to provide administrative
services to CSC in the performance of its functions in relation to a superannuation
scheme administered by CSC. Administrative services would include (but would not
be limited to):
· keeping and maintaining member records
· processing claims and paying benefits
· providing information to members
· collecting contributions from employers and members
· reporting to CSC against agreed benchmarks.
13. The note accompanying subclause 8(1) reflects that the CEO has other
functions associated with being a statutory officeholder and managing the affairs of
ComSuper. This includes preparing reports to the Government on the expenditure of
public money.
14. Subclause 8(2) provides that the CEO has the power to do all things necessary
or convenient to be done for, or in connection with, the performance of his or her
function. This would include, among other things, hiring staff and entering into
contracts.
15. The Government recognises that an effective partnership between the CEO
and CSC is essential for the delivery of efficient and effective administrative services.
Consequently, subclause 8(2) enables the CEO to enter into a written agreement with
CSC about the performance of the CEO's powers and function. Such an agreement
could assist the CEO to clarify the expectations of CSC regarding the quality of
administrative services to be provided by the CEO. The development of an agreement
would encourage discussion between the CEO and CSC on a common approach for
delivering high quality administrative services. A decision to enter into an agreement
would be a matter for the CEO and CSC.
16. Subclause 8(3) provides that when providing administrative services to CSC,
the CEO is subject to any directions issued by CSC and must endeavour to act in
accordance with policies, guidelines and standards determined by CSC. This
subclause is subject to subclauses 8(5) and (6).
17. The capacity for CSC to issue directions recognises that CSC is responsible
for the general administration of each relevant superannuation Act. Where there are
deficiencies in service quality, it will be open to CSC to issue a direction to the CEO
to rectify the deficiency. A direction by CSC could provide clarity where there are
differences between the CEO and CSC regarding priority.
18. The legislation also provides that, in providing administrative services to CSC,
the CEO must endeavour to act in accordance with policies, guidelines and standards
determined by CSC. These policies, guidelines and standards are integral for the
delivery of efficient and effective administrative services that, where possible, are in
line with better practice industry standards. It would be open for CSC to consult with
the CEO during the development of its policies, guidelines and standards to ensure
that they are achievable.
19. In issuing directions or determining its policies, guidelines and standards, CSC
will need to be cognisant of the CEO's position as a statutory office holder under
Commonwealth legislation. This will include taking into account any resource
implications, noting that the Commonwealth, and not members, pay for the
administrative services delivered by the CEO.
20. Subclause 8(4) clarifies that if a direction is given to the CEO by CSC, the
direction is not a legislative instrument for the purposes of the Legislative Instruments
Act 2003 because it is administrative in character. It does not determine or alter the
content of the law. The provision is included to assist readers and is merely
declaratory.
21. Subclause 8(5) provides that the CEO, when providing administrative services
to CSC, will not be subject to the directions of CSC under subclause 8(3), to the
extent that:
· compliance with the direction would be inconsistent with the CEO's performance
of functions or exercise of power under the FMA Act in relation to ComSuper
· the direction relates to the CEO's performance of functions or exercise of powers
under the Public Service Act 1999 in relation to ComSuper
· compliance with the direction would be inconsistent with another law of the
Commonwealth or a Commonwealth policy related to the administration of an
Australian Government superannuation scheme.
22. This provision recognises that the CEO, as a statutory office holder, also has
responsibilities under the FMA Act and the Public Service Act 1999. The CEO may
also be subject to other Commonwealth laws and will also need to comply with
relevant Commonwealth policies. The CEO and CSC would be expected to develop
appropriate strategies for addressing potential conflicts that may arise from time to
time regarding these obligations and the CEO's function to provide administrative
services to CSC.
23. Subclause 8(6) provides that, in relation to the PSSAP, subclauses 8(1) and
(3) have effect subject to such modifications, if any, as are prescribed by the
regulations and that the regulations may provide that subclauses 8(1) and (3) cease to
8
have effect at a specified time. This authority to make regulations is included to allow
modifications to be made to this provision or the provision to cease to apply if
necessary.
24. In particular, it is intended that this provision has sufficient flexibility to allow
the administration of the PSSAP to be outsourced to the available competitive market.
To achieve this, there needs to be adequate flexibility as outsourcing would involve
engaging a commercial provider to carry out the administration function under
contractual arrangements and there may be a need for arrangements to commence
without being subject to the uncertainty surrounding timing of legislative passage.
This would assist in a smooth transition to the outsourced arrangements.
25. Regulations made under this subclause would be subject to disallowance.
Division 2--Appointment of the CEO
Clause 9 - Appointment
26. Subclause 9(1) provides that the CEO is to be appointed by the Minister by
written instrument, on a full-time basis.
27. Subclause 9(2) provides for the Minister to consult with the Defence Minister
in relation to the appointment of the CEO of ComSuper. This reflects that the CEO of
ComSuper is responsible for providing administrative services to CSC in relation to
both the Commonwealth's civilian superannuation schemes and military
superannuation schemes.
28. Subclause 9(3) provides that the appointment of a person as CEO is not
invalid because of a defect or irregularity in connection with the person's
appointment.
Clause 10 - Term of appointment
29. Clause 10 provides that the CEO holds office for the period which is specified
in the instrument of appointment. That specified period, however, must not exceed
five years. Under subsection 33(4A) of the Acts Interpretation Act 1901, the CEO can
be reappointed.
Clause 11 - Acting CEO
30. Subclause 11(1) provides for the appointment by the Minister of an acting
CEO in any of the following circumstances:
· where there is a vacancy in the office of the CEO regardless of whether an
appointment under clause 9 has previously been made to that office
· where the CEO is absent from duty
· where the CEO is absent from Australia
· where the CEO is unable to perform the duties of the office of CEO, regardless of
the reason for the inability.
31. Subclause 11(2) provides generally that anything done by a person purporting
to act under a CEO appointment is not invalid only because of the existence of any of
the following circumstances:
· the occasion for the appointment had not arisen
· the appointment had an associated defect or irregularity
· the appointment had ceased to have effect
· the occasion to act had either not arisen or it had ceased.
32. The note to this clause assists the reader by providing reference to the
appointment provisions of the Acts Interpretation Act 1901.
Division 3--Terms and conditions of the CEO's
appointment
Clause 12 - Remuneration and allowances
33. Clause 12 establishes the CEO's remuneration and allowances. Recreation
leave and leave of absence are dealt with separately under clause 13.
34. Subclause 12(1), which deals with remuneration and not allowances, provides
that the CEO is to be paid remuneration determined by the Remuneration Tribunal.
However, where there is no operative determination by the Remuneration Tribunal,
then the CEO is to be paid such remuneration as is prescribed by the regulations.
35. Subclause 12(2) provides that the CEO is to be paid such allowances as are
prescribed by the regulations.
36. Subclause 12(3) provides that clause 12 has effect subject to the
Remuneration Tribunal Act 1973.
Clause 13 - Leave of absence
37. Subclause 13(1) provides that the CEO has recreation leave entitlements as
determined by the Remuneration Tribunal.
38. Subclause 13(2) allows the Minister to grant the CEO leave of absence, other
than recreation leave, on such terms and conditions as to remuneration or otherwise
that the Minister determines in writing.
Clause 14 - Outside employment
39. Clause 14 provides that the CEO must not engage in paid employment outside
the duties of his or her office without the Minister's approval.
Clause 15 - Disclosure of interests
40. Clause 15 requires the CEO to give the Minister notice of all pecuniary
interests and non-pecuniary interests that the CEO has or acquires that could conflict
with the proper performance of the CEO's functions.
Clause 16 - Other terms and conditions
41. Clause 16 provides for the Minister to determine terms and conditions of the
CEO's appointment in relation to matters not covered by the Act. Under this clause
the CEO holds office on those other terms and conditions.
10
Clause 17 - Resignation
42. Subclause 17(1) provides that the CEO may resign his or her appointment by
giving the Minister a signed notice of resignation.
43. Subclause 17(2) provides that the resignation takes effect on the day it is
received by the Minister or a later day if one is specified in the notice of resignation.
Clause 18 - Termination of appointment
44. Subclause 18(1) provides for termination of the CEO's appointment by the
Minister in any of the following circumstances:
· misbehaviour or physical or mental incapacity of the CEO
· bankruptcy of the CEO
· application by the CEO to take the benefit of any law for the relief of bankruptcy
or insolvent debtors
· the CEO compounds with his or her creditors
· assignment by the CEO of his or her remuneration for the benefit of creditors
· absence from duty by the CEO, except on leave of absence, for 14 consecutive
days or for 28 days in any 12 months
· failure by the CEO to comply with the requirement under clause 14 that the CEO
not engage in outside employment without the Minister's approval
· failure by the CEO, without reasonable excuse, to comply with the requirement
under clause 15 about disclosure of interests.
46. Subclause 18(2) provides for the Minister to consult with the Defence
Minister in relation to the termination of the CEO of ComSuper.
Division 4--Staff and consultants
Clause 19 - Staff
44. Subclause 19(1) provides that the staff of ComSuper are to be persons
engaged under the Public Service Act 1999.
48. Subclause 19(2) provides that, for the purposes of the Public Service Act
1999, the CEO and the staff of ComSuper together constitute a Statutory Agency, and
the CEO is the Head of that Statutory Agency.
Clause 20 - Consultants
49. Clause 20 provides that the CEO may, on behalf of the Commonwealth,
engage consultants to assist in the performance of the CEO's functions. This will
enable the CEO to gain expert advice relevant to his or her functions, as required.
PART 4 - FINANCE AND REPORTING
REQUIREMENTS
Division 1--ComSuper Special Account
Clause 21 - ComSuper Special Account
50. Subclause 21(1) establishes the ComSuper Special Account. Subclause 21(2)
provides that the Account is a Special Account for the purposes of the FMA Act.
Clause 22 - Credits to the Account
51. Clause 22 requires all amounts received for the purposes of the Account to be
credited to the Account.
Clause 23 - Purposes of the Account
52. Clause 23 establishes the purposes of the Account. These are in relation to,
among other things:
· expenses incurred by ComSuper in the performance of its function under the Act
or another law of the Commonwealth
· remuneration and allowances payable to any person under the Act
· the payment of an agreed amount to CSC in relation to a superannuation scheme
administered by CSC. Both ComSuper and CSC incur expenses in relation to the
administration of the main Commonwealth civilian and military superannuation
schemes. Expenses incurred by CSC will be paid by CSC
· meeting expenses of administering the Account and to repay amounts required by
law
· reducing the balance of the Special Account (and, therefore, the available
appropriation for the Account) without making real or notional payment. This
would, for example, facilitate the return of savings to the Budget.
Division 2--Reporting requirements
Clause 24 - Annual report
53. Subclause 24(1) requires the CEO to prepare and give the Minister an annual
report in relation to the performance of the CEO's function during the year. It is
required to be given to the Minister for presentation to the Parliament.
54. Because the Act does not include a specified period of time for provision of
the annual report, pursuant to subclause 34C(2) of the Acts Interpretation Act 1901, it
will need to be provided by 31 December each calendar year in respect of the year
ended on the previously occurring 30 June. Under subsection 34C(3) of the Acts
Interpretation Act 1901, the Minister is required to table the annual report within
fifteen sitting days after the Minister receives it from the CEO.
55. Subclause 24(2) provides that the CEO must include in the report:
12
· particulars of any directions given to the CEO by CSC during the year, as
contemplated by subclause 8(3), and the impact of the directions on the
performance of the CEO's function
· financial statements required by section 49 of the FMA Act
· an audit report on those statements under section 57 of the FMA Act.
PART 5--MISCELLANEOUS
Clause 25 - Delegation by the CEO
56. Clause 25 provides generally for delegation by the CEO.
57. Subclause 25(1) provides that the CEO may delegate, in writing, all or any of
the CEO's functions or powers under the Act, to an SES employee or acting SES
employee in ComSuper. Under section 53 of the FMA Act, the CEO will also be able
to delegate powers or functions to employees who are not SES employees.
58. Subclause 25(2) provides that, in exercising powers of the CEO under a
delegation, the delegate must comply with any written directions given by the CEO.
Clause 26 - Indemnification
59. Subclause 26(1) provides that anything done, or omitted to be done, in good
faith by the CEO in the performance of his or her function set out in clause 8 or a
member of the staff of ComSuper in the performance of that function, does not subject
him or her personally to any action, liability, claim or demand.
60. Subclause 26(2) provides that subclause 26(1) does not prevent CSC from
being subject to an action, liability, claim or demand.
61. The purpose of these provisions is to direct any action, liability, claim or
demand related to the performance of the CEO's function to CSC rather than the CEO
or a member of staff of ComSuper. Clause 35 of the Governance Bill provides for
money payable by CSC in respect of an action, liability, claim or demand that relates
to an Act that it administers, regulations made under such an Act or governing deed,
to be paid out of the CRF or the relevant superannuation fund, depending on the
circumstances.
Clause 27 - Regulations
62. Clause 27 empowers the Governor-General to make regulations prescribing
matters required or permitted to be prescribed or which are necessary or convenient
for carrying out or giving effect to the Act.