Mr PERRETT (Gympie—LNP) (3.45 pm): I rise to speak on the Superannuation (State Public
Sector) (Scheme Administration) Amendment Bill. This bill will facilitate the merger of QSuper and
Sunsuper. If the merger goes ahead it will be a significant moment for our state’s financial services
industry and create the second largest superannuation fund in Australia. This bill will facilitate some
technical and mechanical arrangements to support the merger. According to the explanatory notes, the
board of QSuper, as trustee of QSuper, will be retired and the trust deed for QSuper moved out of
legislation. It will also ensure the new entity will continue to be based here in Queensland. It will protect
public sector employees’ defined benefits and keep a statutory framework for state public sector
employees’ superannuation contribution arrangements.
The new fund will have 13 directors, of which almost half—six—will be union representatives. It
will also have four employer representatives and three independents. Former Labor treasurer Andrew
Fraser, who is currently chair of Sunsuper, will be on the board. The members of this superannuation
fund do not have voting rights. It is important that the board not be stacked with Labor Party and union
apparatchiks. It is even more important that appointees are experienced and well credentialed.
Appointees to the board need to have a high degree of skills and experience in governance and
transparency. The Productivity Commission’s 2018 report Superannuation: assessing efficiency and
All trustee boards need to steadfastly appoint skilled board members, better manage unavoidable conflicts of interest, and
promote member outcomes without fear or favour.
These 13 directors will oversee a fund with two million members and 2,000 employees based
here in Queensland. It was only two years ago in November 2019 that QSuper and Sunsuper reported
they were discussing a proposed merger. Four months later, in March last year they announced an
intention to enter exclusive due diligence. A year later the trustees of QSuper and Sunsuper signed a
heads of agreement to confirm the intention to merge. The expectation is that this merger will deliver
lower fees and better returns for members through increased scale and size.
The Australian Prudential Regulation Authority has been pushing hard for several years for more
fund mergers. It has been intensifying regulatory pressure for mergers in the superannuation industry
to achieve economies of scale. APRA chairman Wayne Byres has repeatedly said the superannuation
industry is not delivering the right outcomes. Last year he said that ‘trustees have not been always been
focused on members’ best interests’ and added that ‘aggregate fees and costs are too high, insurance
has not always been good value for money, and there has been too much inefficiency in the system.’
In May this year the deputy chair of APRA Helen Rowell said that this push for mergers—
… isn’t simply about weeding out persistent underperformers, or making the sector easier to navigate for members—although
both are important. It’s also about scale. All things being equal, the evidence suggests that larger funds are better placed to deliver stronger investment performance and
These views are reinforced by the Productivity Commission. Its report into the superannuation
industry raised what it called ‘compelling’ evidence for the economies of scale to be gained through the
larger fund size associated with mergers. The commission reported there was a positive relationship
between fund size and net returns for profit-to-member funds—also called not-for-profit funds. It found
that larger funds appeared to ‘make better investment decisions within asset classes.’ The commission
also pointed to reduced administrative costs, with associated gains in system savings accruing from
increases in scale totalling an estimated $4.5 billion between 2004 and 2017.
Sunsuper has almost $90 billion in funds and close to 1.4 million members. QSuper has about
$134 billion in funds and more than 600,000 members. A merger of this scale will push efficiencies and
increase employment opportunities for finance industry professionals who previously would have
moved away. As anticipated by the Productivity Commission and APRA, operating costs will be shared
across a broader membership base, expanded investment opportunities and partnerships will be more
easily accessed, better investment decisions within asset classes will be reached, and new services
and products will be inspired by innovation and technological possibilities. However, these outcomes
are not automatic.
Often supporters of mergers and consolidations promise that they will deliver better outcomes.
History has shown this has not always happened. As the Chamber of Commerce & Industry Queensland
submission noted, it is an ‘if’ in relation to the outcome, saying—
If the benefits of size and scale can be brought to life … it will lead to lower fees and larger retirement balances for members.
That is why it is important that the best experienced people are on the board and that the new
merged entity does not lose sight of its core responsibility in handling other people’s money. As the
committee report noted, Queensland’s Under Treasurer emphasised that this bill will not affect the
merger in and of itself. The Under Treasurer said—
We should acknowledge that this is still a proposal. The boards have not formally decided on the merger occurring … The
government is providing the basis upon which—if the trustees are of a mind and they think it is in the members’ best interests
and that is agreed to by the regulator—a merger takes place.
I do not oppose the bill.