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Public Sector Informant : PSI - September
20 THE PUBLIC SECTOR INFORMANT [SEPTEMBER 2010] What are the implications of Third Generation Quality Management for government organisations? • The theoretical framework • Organisational strategy development • Risk and compliance management • Accreditation and certification • Business excellence • Application and case studies 27 -- 30 September 2010 Rydges Lakeside, Canberra Take the quality journey www.2010.qualcon.com.au The International Conference QUALCON 2010 International and national speakers from government, industry and academia: • Prof Nigel Grigg, School of Engineering and Advanced Technology (Quality Systems) Massey University • Prof John Dalrymple, formerly of the Scottish Quality Management Centre and the Centre for Management Quality Research at RMIT • Dr James Galloway, CEO JAS-ANZ • Dr Michael Court, MD, Balanced Scorecard Australia • Dr Michelle Glogau, CE, BioGro New Zealand • Muhammad Asif, Unie of Twente, Netherlands • Mr James Thomson, Standards Australia • Mr Craig Bates, Chairman, Association of Accredited Certification Bodies (AACB) • Mr James Ruprai, Sydney Olympic Park Authority • Dianne Schumacher, Regulatory Manager, Fonterra Ingredients. Third Generation Quality Management first Tuesday of the month STAY INFORMED . . . [SUPERANNUATION:DARYL DIXON] 21st-century service The proposed new trustees board should streamline public servants' rigid super funds New trustees to fix ComSuper's failings A second glaring defect in CSS's administrative arrangements is that final pay- outs are calculated at the time benefits are paid, not at the date of the claim. Fragile nest eggs: CSS members can lose large sums of money between the time they claim a pay-out and the time it is received. Federal public servants could lose money if the impasse created by the hung Parlia- ment and the resulting weak- ness of minority government further delays, or even prevents, the passage of the Australian Government Super- annuation Schemes Bill 2010. This Bill aims to consolidate the control of key federal super funds under a single trustee body. The plan was announ- ced over two years ago and scheduled to commence on July 1 this year, but it was delayed because the Senate had not finished considering the legis- lation when the election was called. Merging the boards of Military Super, the Defence Force Retirement and Death Benefits Scheme Auth- ority and ARIA (which controls the ComSuper funds) is a sensible and overdue initiative. Under the legis- lation, the Commonwealth Superan- nuation Corporation would become the single trustee body for these large funds, generating substantial savings and streamlining administration. The previous government had an- nounced that General Peter Cosgrove and former Military Super chief executive John McCullagh would be member representative directors of the new trustee board. The new government will take a significant step towards improving the corporate government of CSS, PSS and PSSap if it confirms the creation of a single trustee as well as these two appoint- ments. CSS members stand to lose the most from any further delay in improving the governance and oper- ation of their fund. The recently concluded Cooper inquiry into superannuation highligh- ted the need for improved corporate governance of our largest super funds, to ensure that the funds operate from the perspective of benefiting their members. My past Informant columns have highlighted precisely how ARIA's trustees have done little to further their members' interests in a continuing volatile investment environment. Cosgrove, in his time with the defence force, built a reputation for protecting and enhancing the interests of people working for and with him. McCullagh has overseen the Military Super Scheme's operation, which offers a far wider range of investment options than the CSS. New trustees with these back- grounds are unlikely to accept several current practices of the CSS. As the Informant has highlighted previously, the CSS contains traps for the unwary, which a new single trustee board could fix quickly and thereby vastly improve the situation of members. The most serious shortcoming is the lack of investment choice offered to members whose accumulated con- tributions and interest are entirely subject to investment risk. The CSS offers members only two starkly contrasting choices: a high-risk and, as recent events have proven, volatile default balanced/growth option and a totally safe cash option. But even given this choice, CSS members can only change their investment option once a month at the end of the month. In today's computerised and sophisti- cated investment environment, this is an ice-age option compared with those offered by other funds, includ- ing Military Super and PSSap. A second glaring defect in CSS's administrative arrangements is that final pay-outs are calculated at the time benefits are paid, not at the date of the claim. Unlike the PSS, which calculates pay-outs at the higher of either the value at the date of claim or the date of pay-out, CSS members in the default investment option can lose or gain large amounts of money during periods of volatile markets based on situations beyond their control, including administrative delays in payment of the benefit. A trustee board concerned about the equitable treatment of members could change the rules to offer members options to avoid the possi- bility of losses during the processing period. One such option would be to allow a switch to the safe cash option at the date of claim. Even if the trustees don't see the need to offer such protection against losses while the claim is being processed, they should at least be required to inform members of the investment risks that default fund members are exposed to during this period. These are just two examples of urgently needed reforms to CSS's administration. Last month's Inform- ant also highlighted design defects in PSSap, which I will discuss further next month. Overall, establishing the new trustee board quickly will allow the opportunity to improve services to members of all funds as well as avoid overlap and duplication, and ensure the best possible governance of each separate fund. All federal employees have a vested interest in the new government placing a high priority on passing this legislation. Daryl Dixon is executive chairman of Dixon Advisory. email@example.com
PSI - October