The very best legislation often comes about after there is a crisis, an independent investigation with recommendations that turn into laws that cut the chance of the original crisis occurring again.

The lack of credibility for the proposed superannuation governance changes, which were defeated in the Senate last week, arose from the absence of a crisis. Instead, the proposal of an independent chair and independent trustees comprising one third of the board, largely rested on the notion of preventing a future crisis.

Because neither the legislation nor the assistant treasurer, Kelly O’Dwyer, could persuasively make the case for a future crisis, at best, the legislation looked unnecessary, at worst it looked like a hurdle placed spitefully in the way of industry funds, on which so many Australians have their superannuation invested.

As a basic premise, the idea of the independent trustee bringing valuable skills to a board and objectively reviewing a fund’s performance is strong. The idea that the larger a superannuation fund gets (which was part of the government’s point), the better its governance should be, is sound too. But most of the funds I encounter are already wrestling with this; often due to the prompting of recent and existing regulation. Indeed, many have brought in independent trustees for the first time over the past two years as part of this process.

Overall, the changes taking place and the general high level of out-performance of not-for-profit funds suggests this sector of the Australian economy should be encouraged, rather than constricted. It also makes any notion of a future crisis appear less likely.

The sector’s openness to improve has been backed up by the AIST hiring Bernie Fraser to run an independent governance review of not-for-profits funds to gain the support of the independent senators who united to defeat the government’s legislation.

This is the piece of credible and focused investigation the government itself should have commissioned at the start of this sorry process.