Speaking at the Financial Services Council conference on the Gold Coast on Friday, Assistant Treasurer Josh Frydenberg rejected earlier accusations by Opposition leader Bill Shorten that the Coalition was ‘interfering’ with superannuation.
Mr Frydenberg named a long list of industry bodies that have support the government’s proposal to mandate a minimum of one-third independent directors (as well as an independent chair) on super boards.
The assistant treasurer said the government’s proposals are in line with the recent Financial System Inquiry and the Cooper Review.
Mr Frydenberg also responded to some of the “claims” that were made about the proposed governance changes throughout the consultation process.
“Firstly, it has been suggested that the government wants to end equal representation on trustee boards. This is not the case,” he said.
The government is “in no way” preventing superannuation boards from enshrining equal representation of employers and members in their constitutions, Mr Frydenberg said.
“The draft legislation does not refer to the composition of the remaining two-thirds of board members, leaving capacity for boards to split these directors between member and employer representatives if they consider this to be appropriate.”
Second, Mr Frydenberg dismissed concerns that the compliance costs of the governance changes would be high.
“As the former parliamentary secretary to the prime minister with responsibility for deregulation, I place great importance on these matters. A fully compliant Regulatory Impact Statement, or ‘RIS’, detailing the expected costs and benefits of this proposal will be included with the final legislative package.
“A three-year transition period will also apply and we have given boards the flexibility to decide whether they will appoint additional directors or simply reduce the size of their board to meet the new requirements,” Mr Frydenberg said.
Finally, the assistant treasurer rejected the notion that there are not enough independent directors available to meet the requirements for all super funds.
“There are currently around 1,000 directors in the super industry. If one-third of those have to be independent, there will be a maximum of 330 independent directors required across the whole industry, noting that many funds, including industry and public sector funds, already have a number of independent directors on their boards,” Mr Frydenberg said.
“The Australian Institute of Company Directors (AICD) alone already has 11,000 members on their database who are actively looking for directorships.
“Adding to this, a number of superannuation industry bodies have also started to train independent directors and expect several hundred to go through their programs.
“It is simply not the case that there is a shortage of candidates to fill these positions,” Mr Frydenberg said.
