Wednesday, 5 March 2025

Superannuation Legislation Amendment Bill 2025

Statement of compatibility

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (10:41): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the Superannuation Legislation Amendment Bill 2025:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the Superannuation Legislation Amendment Bill 2025.

In my opinion, the Superannuation Legislation Amendment Bill 2025 (Bill), as introduced to the Legislative Assembly, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.

Overview

The Bill amends the Emergency Services Superannuation Act 1986 to –

(a) provide for a 90 per cent superable salary policy for Executive officers, and other contract employees, who are members of the Emergency Services Superannuation Scheme;

(b) increase the number of times members of the Emergency Services Superannuation Scheme can change their contribution rate each year;

(c) increase the period of time in which a spouse, following the death of a member, may apply to become a member of Emergency Services and State Superannuation’s accumulation arrangement, the ESSPLAN Scheme;

(d) reduce the size of the Emergency Services Superannuation Board from 12 to 10 members;

(e) remove the requirement for State Superannuation Fund representatives on the Emergency Services Superannuation Board to be State Superannuation Fund members and vary their selection process such that they are nominated by unions rather than being elected by members of the State Superannuation Fund; and

(f) abolish to the position of deputy Board member for the Emergency Services Superannuation Board.

The Bill also amends the State Superannuation Act 1988 and Transport Superannuation Act 1988 to increase the number of times members of the New Scheme and Transport Superannuation Fund respectively can change their contribution rate each year.

Human rights issues

Overall, most of the provisions of the Bill do not engage the human rights contained in the Charter. Furthermore, in general, most of the provisions in the Bill operate beneficially in relation to natural persons.

The right which is relevant to this Bill is the right to take part in public life.

Right to take part in public life: section 18

Section 18(1) of the Charter provides that every person in Victoria has the right, and is to have the opportunity, without discrimination, to participate in the conduct of public affairs, directly or through freely chosen representatives.

The Charter does not define the term “conduct of public affairs”, but it may include any exercise of political, legislative, executive, or administrative power at all levels, including by participating directly in the conduct of public affairs by, for example, taking part in popular assemblies which have the power to make decisions about the affairs of a particular community.

Reduction in size of Board from 12 to 10 and the abolishment of the position of deputy Board member

Clause 4(1)(a) of the Bill reduces the total number of Board members from 12 to 10. Clause 6 of the Bill removes the position of deputy Board member. Clause 12 of the Bill provides a new section 35, which contains transitional provisions that provide for the cessation of any existing positions which are surplus to the new membership.

Interpreted broadly, it is arguable that the right contained in section 18(1) of the Charter has been engaged on the basis that the Emergency Services Board is a representative board established to make decisions regarding the administration of the Emergency Services and State Superannuation Schemes. A person’s involvement in a board of this nature may be regarded as a right to participate in the conduct of public affairs, because the Board makes decisions about a group of members in society.

If so, there is a reasonable argument that this right has not been limited by the Bill. The reason for the reduction is that it reflects the declining number of contributors to the Emergency Services and State Superannuation Schemes. Indeed, there are currently two vacancies on the Board, and a number of deputy vacancies. As such, the reduction in Board members from 12 to 10, and the removal of deputy members, will not have a practical effect on the term of any existing Board member.

Furthermore, even if the right has been limited by the Bill, such a limitation would likely be justified having regard to the purpose of the limitation, which is to reflect the declining

number of members, improve efficiencies of the Board and assist the Board in running more effectively.

Change from election to nomination

Clause 4(1)(b) of the Bill amends the form of appointment for two of the members of the Board from election to nomination.

It is arguable that removing the ability to be involved in the election process engages the section 18(1) right to participate in the conduct of public affairs. In a similar way as outlined above, a person’s ability to vote in this election process may be regarded as a limitation on this right, as they can no longer take part in a process which relates to the composition of a Board that makes decisions about a group of members in society.

If so, the limitation imposed by the Bill is justified. This is having regard to the purpose of the limitation, which is to avoid representation imbalances, and to avoid vacant positions which have the effect of disenfranchising members of the State Superannuation Schemes, due to the difficulty in securing eligible candidates from the small pool of active members. Furthermore, this amendment is also unlikely to impact many people due to the diminishing number of State Superannuation Fund members.

Conclusion

No Charter rights are impermissibly limited by the Bill. I therefore consider that the Superannuation Legislation Amendment Bill 2025 is compatible with the Charter.

THE HON DANNY PEARSON MP

Minister for Finance

Second reading

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (10:42): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

I move that this Bill be now read a second time. The purpose of the Bill is to ensure consistency in the application of the 90 per cent superable salary policy for members of the Emergency Services Superannuation Scheme (ESSS), assist members in managing their superannuation and personal finances by enabling more frequent contribution rate changes, better support non-member spouses of members who die to apply to become members of ESSPLAN during a time of grief, and make changes to the membership of the Emergency Services Superannuation Board for efficiency and appropriateness in light of the current membership arrangements.

The Bill:

a. Amends the Emergency Services Superannuation Act 1986 (ESSA) to legislate the 90 per cent superable salary policy for Executive Officers, and other contract employees, who are members of the ESSS to ensure this policy is applied consistently in future;

b. Amends the ESSA, the State Superannuation Act 1988 (SSA) and the Transport Superannuation Act 1988 (TSA) to increase the number of times members of the ESSS, New Scheme and Transport Superannuation Fund can change their contribution rate each year so that members are better able to manage their superannuation and personal finances;

c. Amends the ESSA to allow spouses, following the death of a member, a period of 12 months in which to apply to become a member of ESSPLAN to better support non-member spouses during a period of grief and potentially trauma;

d. Amends the ESSA to reduce the size of the Board from 12 to 10 members to improve the operational efficiency of the Board;

e. Amends the ESSA to remove the requirement for State Superannuation Fund (SSF) representatives on the Board to be SSF members and vary their selection process such that they are nominated by unions that are representative of the members of the SSF. This is designed to respond to the ongoing decline in the number of active SSF members; and

f. Amends the ESSA to abolish the position of deputy Board member as they are rarely called on and there are alternative ways modern boards can manage the absences of existing board members.

90 per cent Superable Salary rule for emergency services Executive Officers

In 2022, the Government agreed to the superable salary for new emergency services Executive Officers, and other contract employees, who are members of the ES DB Scheme being determined as 90 per cent of their remuneration subject to a minimum of the highest non-executive salary. The prevailing method of determining superable salary was grandfathered for existing emergency services Executive Officers, while providing them with the ability to opt into the new arrangements for both past and future service.

This policy was initially implemented informally, by notifying employers of the new superable salary policy. Government now proposes to formalise this policy in legislation to ensure that it applies consistently to all relevant members of the ESSS.

Allow more frequent changes to member contribution rates

Currently members of the ESSS, New Scheme and Transport Superannuation Fund can only change their contribution rate once a year. This limit was most likely imposed when these

schemes were introduced as the administration required was more resource intensive and time consuming.

The Bill removes the limit on the number of times members of the ESSS, New Scheme and Transport Superannuation Fund can change their contribution rate each year.

Given the automation of most of the schemes’ administration processes, removing the current limit will have a minimal impact on the schemes and will allow members to better manage their superannuation and personal finances.

Spouse membership following a member’s death

Under current arrangements, following the death of a member, their spouse has up to three months to apply to become a member of ESSSuper’s accumulation arrangement, the ESSPLAN Scheme.

The Bill extends the period in which a spouse can apply to become an ESSPLAN member to 12 months. This is designed to support non-member spouses during a time of grief and potentially trauma.

Reducing the size of the Board to 10 members

Currently under the ESSA, the Board is to consist of 12 members that are appointed by the Governor in Council. Six board members are nominated by the Minister and six are directly elected by members of the schemes (member-elects). Three of these member-elects are currently elected by members of the ESSS, with one member-elect for each of the emergency services organisations. The remaining three member-elects are elected by

members of the former SSF. This arrangement is consistent with Commonwealth superannuation legislation which generally requires ‘equal representation’ of employees and employers on superannuation trustee boards.

As the SSF is closed to new members, the number of active SSF members has declined significantly and will continue to do so. Active SSF members are now only around 11 per cent of the SSF’s total membership.

As only active SSF members can vote and be elected to the Board, it is very difficult to source SSF member-elects from the declining pool of active SSF members.

The size of the current Board is also larger than is considered optimal and active SSF members are now only around 20 per cent of all active ESSSuper members (compared to around 75 per cent when the current Board composition was agreed).

To address these issues, the Bill reduces the size of the Board from 12 to 10, by reducing both the number of SSF-member elects and Government nominated members by one. This ensures that the equal representation of employee and employer members of the Board is retained.

The Bill will also subsequently amend quorum requirements for SSF and ESSS member-elects to the Board to ensure efficient and balanced decision making.

Method of selecting SSF representatives

Currently SSF member-elects are directly elected by active members of various employer groups. This ensures the Board can make decisions informed by the valuable lived experience of elected members.

However, with a diminishing number of active members, making up approximately 11 percent of all SSF members, it has become more difficult to recruit new suitable candidates resulting in vacancies that cannot be filled.

The Bill therefore includes amendments to remove the requirement for SSF representatives on the Board to be SSF members and amends how SSF representatives are selected, so they will be nominated by relevant unions who are representative of the make up of members of the SSF.

The Minister, in consultation with relevant unions, will determine the union nomination process, including the unions that may nominate candidates for the two SSF positions. Candidates nominated by the unions do not need to be members of that union and unions will be able to nominate Board candidates with relevant skills, boosting the skills and experience of the Board. This arrangement aligns Victoria the superannuation boards of the Commonwealth and other states.

Given the large active membership of emergency services members, the Bill does not change the number of ESSS member-elects nor the method of selecting or appointing them.

Abolishing of the position of deputy member

The Board currently consists of nine deputy member positions, one for each of the six member-elects and a pool of three for the Government nominated members. Deputy members act in the position of Board members when a Board member is absent, ill or suspended.

Experience over the years has demonstrated that there has been minimal need to call on deputy members as there are alternative ways that modern boards can manage the absences of existing members. Between the period from 2011 to 2023, deputy members have only attended Board meetings on three occasions.

For this reason the Bill includes amendments to abolish the position of deputy Board member.

I commend the Bill to the house.

Cindy McLEISH (Eildon) (10:42): I move:

That the debate be now adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned for two weeks. Debate adjourned until Wednesday 19 March.