Thursday, 4 April 2019
Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017; Second Reading
I thank all those who have made a contribution to the debate. The super industry is a $2.7 trillion industry and it is critical that the system is modern and solely focused on delivering outcomes for members. A modern super system empowers members and provides for transparency around fund activities and performance. Many of the measures in the bill will be on the policy agenda for several years and have been recommended by past reviews into super—including, most recently, by the Productivity Commission, which labelled them 'a policy must-have'.
The bill implements two critical recommendations into the royal commission into misconduct in the banking and financial services industry. The measures in this bill will strengthen the regulator's power and improve accountability, transparency and, ultimately, member outcomes. This will boost members' confidence that their money is being managed in their best interests. The government wants a super system that delivers outcomes for the benefits of members—not shareholders, directors, employers or trade unions. I am confident the measures in the bill will achieve these outcomes.
Schedule 1 creates a requirement for both MySuper and choice products to consider the appropriateness of their product on an annual process via the new outcomes test. It also creates an obligation on all trustees to promote the financial interests of members. This will boost the accountability of trustees and ensure that the outcomes delivered to members are in their best interests.
Schedule 2 gives APRA more scope to cancel an application or cancel a MySuper application where it believes the trustee will not comply with the obligations. This will improve the quality of default MySuper products by allowing APRA to refuse or cancel an authority to offer a MySuper product if it has a reason to believe the trustee may fail to comply with its obligations.
Schedule 3 of the bill delivers on both a recommendation of the financial system inquiry the government accepted in 2015 and a recommendation of the royal commission into misconduct in the banking, super and financial services industry. It will strengthen the accountability of trustees and directors by making them subject to civil and criminal penalties for breaches of their duties.
Schedule 4 gives APRA the power to reject a change in the ownership of a corporate trustee. Given the potentially detrimental outcomes that may arise from the mismanagement of funds, we believe that no-one should be able to own or control a super fund without APRA's approval.
A strong regulator is crucial for ensuring confidence in the super system, and schedule 5 of the bill will ensure this. The new directions power will harmonise APRA's directions powers across credit unions, friendly societies and the banking, insurance and super industries. This will enable APRA to intervene at an early stage to address prudential concerns in a manner that ensures the required actions are in the best interests of members. It will enhance APRA's powers to issue directions to a trustee, or its connected entity, to take, or refrain from taking, specific action.
Schedule 6 of the bill introduces a workable arrangement for portfolio holding disclosures. It will boost transparency for members and will also ensure that Australia's system is consistent with international best practice. The approach in the bill will significantly reduce the complexity of the current law, which was introduced in 2012 but has never commenced operation.
Schedule 7 improves transparency by introducing a requirement for super funds to hold annual members' meetings. This will give members the ability to hold trustees accountable for the operation and performance of their funds.
Schedule 8 enables APRA and fund members to gain a more complete understanding of how funds are spending members' moneys, and whether this is in the best interest of members, via a new reporting standard.
Importantly, schedule 9 includes a measures to implement another recommendation of the royal commission around incentivising employers. The measure will strengthen the effectiveness of the prohibition of inducements to employers by trustees and allow civil and criminal penalties to be imposed on trustees that use goods or services to induce employers.
We consulted with stakeholders in the development of this legislation. Dozens of written submissions were received from industry and individuals on the draft legislation, and over 20 organisations participated in multiple roundtables. There was strong support for the policy intent of the bill. I would like to thank all those who contributed to the design of the bill. Once again, we make it very clear that the government is focused on ensuring Australia's super system delivers outcomes for all Australians first and foremost, not for any self-interest in the industry. I am confident the measures in this bill will achieve these outcomes. I commend the bill to the House.
Bill read a second time.