Government tailors unions a bespoke default funds suit
The Government claims it has delivered on the Productivity Commission’s default fund recommendations, but Mike Taylor writes that the devil is in the detail.
In the end, the Government did exactly what was expected with respect to the Productivity Commission’s final report on default funds under modern awards – it tailored the findings to suit its needs.
And, as tailoring goes, it represented a fine piece of legislative needlework, with critics having to look extremely closely to detect the manner in which key elements might be perceived as a “stitch-up”.
To understand the legislative tailoring which took place, readers would need to first closely read the Productivity Commission’s final report before acquainting themselves with the Hansard transcript covering evidence given by the Productivity Commission during Senate Estimates.
A close reading of the Hansard will reveal comments by the deputy chairman of the Productivity Commission, Mike Woods, in response to a question from the shadow Assistant Treasurer, Senator Mathias Cormann, which suggested the commission had been subject to undue influence by the minister.
Cormann’s question was premised on Bill Shorten, nearly six weeks before the release of the Productivity Commission’s final report, having formally expressed the Government’s support for a submission authored by two of his departments – Treasury and the Department of Education, Employment and Workplace Relations.
That submission rejected the concept of all approved MySuper funds being eligible for selection as default funds, and provided strong backing for the establishment of an expert panel within Fair Work Australia.
Woods specifically rejected the suggestion that Shorten’s backing of the departmental submission had represented the application of undue influence, but acknowledged that, indeed, the contents of that submission had been reflected in the Productivity Commission’s final report.
“In some respects our position and the position of that submission are the same and in some respects they are significantly different, and we can deal with both,” the commission’s deputy chairman said.
“In terms of a particular issue that was put forward by the Financial Services Council that the employer should be able to choose any fund – which was our Option 1 in our draft – we did not consider that that met the requirement specifically, and that continued to be rejected in our final [position] as was discussed with them at hearings,” he said.
On the specific question of undue influence raised by Cormann, Woods insisted the commission’s final report had not followed the Government’s submission to the letter.
“…the departmental proposal was that funds would be able to put their proposals to a panel of experts, which would then make recommendations to the full bench of Fair Work Australia,” he said. “We are adamant that all funds should be able to have standing for this purpose directly to a panel of Fair Work Australia as the final decision-maker”.
The inference drawn from Woods’ comments is that all approved MySuper products can make their case to the expert panel within Fair Work Australia (now the Fair Work Commission), with that panel then determining which are best suited to the awards in question.
The Government’s fine tailoring is therefore revealed in Shorten’s media release explaining the nature of the legislative amendments he was about to introduce as a result of the Productivity Commission report.
It stated:
“All funds with a generic MySuper product will be able to apply for selection as a default fund on an equal basis, which will bring greater contestability to the system.
“An Expert Panel within the Fair Work Commission will assess funds on the basis of legislative criteria, which are based on those proposed by the Productivity Commission.
“The Expert Panel will then decide which funds meet the criteria in an open and transparent process.
“A Full Bench of the Fair Work Commission will then determine which particular funds from the Default Superannuation List are best suited for inclusion in each modern award, with the best interests of the employees covered by that particular award as their overarching consideration.”
In other words, the final decision will not rest with the so-called expert panel but, rather, with the industrial relations judiciary which makes up the full bench of the Fair Work Commission – an arrangement almost identical to that which prevailed in the past.
While the formation of an expert panel will at least introduce an element of technical knowledge and industry understanding to the process, it will be a matter for those running the Fair Work Commission whether the expert panel’s recommendations are accepted in whole or in part.
The Federal Opposition has broadly rejected the Government’s approach – and has indicated it will adopt the approach that any approved MySuper fund can be selected as a default fund.
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