Senators John Madigan, Glenn Lazarus, Jacqui Lambie and Nick Xenophon have released a joint statement with Labor Senator Sam Dastyari and Greens Senator Peter Whish-Wilson stating they will not support the Superannuation Legislation Amendment (Trustee Governance) Bill 2015.
The bill, which was introduced to parliament on 17 September by then assistant treasurer Josh Frydenberg, proposed to force industry superannuation funds to increase the number of independent directors on their boards to one third (along with the imposition of an independent chair).
The changes have been vociferously opposed by industry super fund lobby groups Industry Super Australia (ISA) and the Association of Superannuation Trustees of Australia (AIST).
The decision by the crossbenchers to oppose the bill is likely the result of effective lobbying by the ISA and AIST, with the statement by the crossbenchers noting that both industry fund groups have "agreed to undertake a comprehensive review of not-for-profit fund governance to propose a code of best practice".
"Crossbench and opposition senators think this bill goes too far. Senator John Madigan, Senator Glenn Lazarus, and Senator Jacqui Lambie have suggested an alternative to imposing these changes by legislation, and instead propose an industry review of not-for-profit fund governance," said the statement.
"In addition, the Senators have also recommended the review consider how industry funds can increase their investment in Australia, thereby supporting the local economy and the growth of jobs."
The Financial Services Council (FSC), which represents retail superannuation funds that already have independent directors in place, released a statement saying it "looks forward to the continued discussion of the governance of superannuation funds".
"The proposal for independent directors on the superannuation trustee boards is a moderate reform that will apply to all superannuation funds – retail, industry, corporate and public sector," said the FSC.
"The government’s Financial System Inquiry and the previous Labor government’s Cooper Review both recommended the appointment of independent directors on superannuation trustee boards."
Former FSC chief executive John Brogden, who now heads up the Australian Institute of Company Directors, said the decision by the Senate crossbenchers puts the interests of unions and employer groups ahead of superannuation fund members.
"This decision rejects all tenets of good governance in the modern era. It defies common sense that unions and employer groups would deny their members the benefits of independence on their boards," Mr Brogden said.
"Independent directors are widely recognised as a critical element of good corporate governance. The importance of independence is recognised in both the ASX Corporate Governance Council guidelines that apply to listed companies and the standards that APRA imposes on banks and insurers.
"The industry review of governance standards that is now proposed by Industry Super Australia and the Australian Institute of Superannuation Trustees would need to be built on the foundation of internationally accepted principles of governance, which includes the importance of director independence," Mr Brogden said.
Current investment returns – the strength of which the ISA and AIST often point to – are "not the sole litmus test for effective governance nor is it guaranteed that they will continue if current board structures are maintained", he added.
