Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

At the outset I say that I do acknowledge the quality of the advocacy of the member for Dunkley but that there are some concerns I have to express. The opposition has moved three substantive amendments. The first opposition amendment would mean that a tailored MySuper product for a large employer would not have to be authorised by APRA. This would allow a trustee to accept contributions even if APRA had not assessed the product. Such an approach would be unique. Most licensing regimes generally do not allow anything to commence until the regulator has made a decision; there is no reason put forward by the opposition that authorisation for a MySuper product should be any different. APRA has said repeatedly that authorisation is an important entry control for MySuper products. It ensures that there can be an upfront assessment that the MySuper product meets the legislative criteria before members' contributions are placed in the product. This reasoning applies equally to tailored MySuper products established for a large employer. A tailored MySuper product for an individual large employer can differ in every respect from the main MySuper product that a fund may offer—including in its fees, administration, services, financial advice and investment strategy. Therefore it is important that tailored MySuper products meet all of the same requirements as other MySuper products, including authorisation.

Up-front authorisation of tailored MySuper products will provide certainty for employers and employees that the MySuper product will not be disallowed by APRA after it has been put in place and started to receive contributions. This would be very disruptive and cause the employee to find another default fund. APRA has already indicated in draft guidance material that, where a trustee has been authorised to offer a MySuper product, authorisation of subsequent tailored MySuper products will only need to focus on key differences from the fund's main MySuper product. As such, where there are few differences in a tailored MySuper product, the authorisation process is expected to be relatively quick.

The second set of opposition amendments aims to amend the bill to base eligibility for a tailored MySuper product on 500 employees. At one level I can understand why the opposition advocates this, but the reality in the real world is that a test based solely on employees would allow an employer to obtain a tailored MySuper product for substantially fewer than 500 members—for example, where the employer is required to contribute to a different default fund under the relevant award. This would undermine the purpose of the test, which is to ensure that each MySuper product has sufficient size and is viable. That is why the government's bill requires an employer to contribute to the fund, and for 500 of their employees to be eligible. Initially I was attracted to the idea of 500 employees, but the research and due consideration shows that the 500 members test is a much more pragmatic and workable test and that it will ensure that there is sufficient scale for each MySuper product. Furthermore, the opposition amendments on eligibility just do not work. They would in fact appear to prevent APRA from disallowing tailored MySuper products if they fail to satisfy any of the other legislative criteria.

It is unclear what the opposition is trying to achieve through its third set of amendments, which are on intra-fund advice. Limiting a trustee in charging for personal advice that relates to the member's beneficial interest in the fund is already achieved by the government's model for intra-fund advice. That said, if the opposition amendment is trying to prevent intra-fund advice covering personal advice, the ability of Australians to access advice about one of their most important financial assets in a cost-effective manner would be significantly and unfairly inhibited.

For these reasons and after due consideration of the case by the opposition, the government has concluded that it does not support the amendments moved by the opposition.

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