Monday, 23 March 2020
Coronavirus Economic Response Package Omnibus Bill 2020, Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Bill 2020, Australian Business Growth Fund (Coronavirus Economic Response Package) Bill 2020, Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020, Structured Finance Support (Coronavirus Economic Response Package) Bill 2020, Appropriation (Coronavirus Economic Response Package) Bill (No. 1) 2019-2020, Appropriation (Coronavirus Economic Response Package) Bill (No. 2) 2019-2020, Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020; Second Reading
I should start by saying that I wish to move an amendment that has been circulated in my name. I move:
That the following words be added after paragraph (7):
"(8)(a) every Australian deserves a dignified retirement;
(b) Australians are proud of our world-class superannuation system;
(c) drawing down on superannuation when the market is at historic lows will have negative implications for most Australians, and should only be an option of last resort; and
(d) the administrative arrangements specified in Schedule 13 of the Coronavirus Economic Response Package Omnibus Bill 2020 will not ensure that Australians in genuine hardship receive prompt payment from their superannuation fund;
(9) calls on the Government to:
(a) ensure that ordinary Australians have access to the right information and advice in times of hardship by increasing funding for financial counselling and the Centrelink Financial Information Service; and
(b) closely monitor the financial advice industry to ensure that early release claimants are not provided with inaccurate advice; and
(10) asks the Government to:
(a) table a letter from the Chair of the Australian Prudential Regulation Authority, certifying that the implementation of Schedule 13 will have no systemic impacts on the superannuation system; and
(b) consult with industry, unions, and representatives of other political parties before the implementation of the measures in Schedule 13, noting the potentially significant, negative impact on the retirement outcomes of ordinary Australians".
This bill—the Coronavirus Economic Response Package Omnibus Bill 2020—is about money. It's about facilitating payments, but it's about much more than that. We come here today in absolutely extraordinary circumstances. It's about how we respond as a government on behalf of the people that we represent to face the greatest challenge that any of us have experienced in our lifetime. It's about how we as a community respond to an existential threat, a disease that was discovered less than six months ago but has now spread to every continent.
As I came into the chamber today, I checked the number of people who had been infected. In Australia, the number today stands at 1,550, growing at about 22 per cent a day. Globally, it is 335,972. Tragically, seven Australians have already lost their lives from this terrible disease. Globally, in excess of 14,500 people have lost their lives, with that number growing by multiple thousands every day. This is real. If nothing changes, if that growth rate continues, by the time New South Wales schoolchildren are scheduled to go on holidays there will be 55,000 infections. I just want to repeat that: we are at 1,550 today, but by the time New South Wales schoolchildren are scheduled to go on holidays, if we keep growing at the same rate, it will be around 55,000. By the time they come back off holidays, there will be in excess of two million infections, if we continue to grow at the same rate.
Business as usual is not good enough. Despite the ubiquity of the disease, the response globally and even locally has been anything but ubiquitous. I have to say some countries have been better prepared in this than others. Those who had the more recent experience of responding to the SARS epidemic were well briefed and well prepared on the steps that they needed to take. They appear to have had a better response with their public health initiatives. Others have been slower to move. History may prove me wrong on this, as things are moving very, very rapidly, but it appears the drastic response in the Chinese province of Hubei has been the most successful in slowing down the spread of the epidemic. It sends a very clear message to us as policymakers about the sorts of responses that are going to be necessary. If I leave one message on behalf of the people that I represent in this parliament today, it is that we have to move faster. Business as usual is not going to cut it.
I want to give a shout-out to the locals who are already hurting. Thousands and thousands of people throughout the Illawarra are losing their jobs, losing their businesses and losing their livelihoods. To you today, I say: I acknowledge your pain. We can't do everything to ameliorate that, but it behoves us to do everything that is possible.
I want to acknowledge the people who are already on the front line fighting in our communities in the first wave of this response: the health workers, the doctors, the nurses and the clinicians who are on the front line in some of the most difficult positions, putting themselves at risk as they help to save lives in our communities. They need our support and they need our acknowledgement. They certainly do not need our hostility. We should be doing everything we can to ensure that they have all of the tools, all of the resources and all of the funding that are going to be necessary over the very difficult months ahead.
I turn to the matters considered in the bill. The minister has described the bill as a stimulus. It's not. It's about maintenance, and I mean no criticism of the minister or the government when I make this observation. It's not about stimulus; it's about maintenance—about maintaining the vestiges of the economy and the community until a health recovery occurs. A part of the problem is that, in most respects, you've got a health policy and an economic policy pulling in different directions. Let me explain. The health imperative—social isolation and social distancing—of its necessity requires people to stay at home and reduce the amount of contact that they have with others. When you compare that to the traditional economic response in times of an economic downturn, it's almost the very opposite: we try to lift aggregate demand by providing households, consumers and businesses with money and encouraging them to get out there and spend it.
Clearly, an economic response which is built around getting out there and spending it is not really going to work when the health response is about telling people, 'Actually, we need you to stay indoors; we need you to stay at home; and we need you to reduce the contact that you're having with other people.' Before others jump to contradict, I know that there is lots of economic activity that doesn't involve direct face-to-face contact with others. But so much of our economy, particularly our services economy, does. So those people who are in the front line of the services economy—people in the hospitality industry, in the services industry, and in health and personal care—are going to do it really hard over the coming months, and they deserve every bit of support that we can give them.
It also means that we have to be very careful about the economic policies that we deploy to fight the economic consequences of what is a health pandemic. It's why our economic policies need to be well thought through. If they are, they will work, and we will get to the other side of this thing. We will be able to rebuild our economy and rebuild our livelihoods and put communities, businesses and households back together again. But, if they aren't well crafted, they'll have the opposite effect.
I want to turn my attention to schedule 3 of the bill that is before the House. Schedule 3 proposes to amend the SI(S) Act, amongst other instruments, to allow the early cash-out of superannuation on the grounds of hardship. The law already allows for the cash-out of superannuation on the ground of hardship. These amendments will expand those provisions. I want to make it quite clear that Labor understands the tough positions that many households are in. But the simple fact of the matter is that, in normal times, cashing out your superannuation is an incredibly bad decision. That's why the best advice should be available to households as they make their tough decisions on these new arrangements.
For most fund members in most circumstances it is not in their financial interest to do this. For example, as a general rule, an employee on average wages their late 20s who withdraws $20,000 from their superannuation account will be somewhere between $80,000 and $100,000 worse off over their lifetime as a result of that one decision—$20,000 today; $80,000 to $100,000 worse off in their retirement accounts. In the first 10 minutes of the stock market opening today, the Australian Stock Exchange, the ASX 200, lost eight per cent in value. It's lost 38 per cent in value since the coronavirus began to emerge as an economic issue at the end of February—38 per cent. I make this point because it is hard to think of a worse time in the last 30 years, since occupational superannuation has existed, for a fund member to draw money out of their account. It's 38 per cent down since the end of February. If we draw money out now as an individual or as collectives, we are crystallising that loss. I know households are struggling with a lot of difficult decisions: this is one of them.
Can I also say, as a result of legislation that the government passed through this parliament a few months ago which changes the life insurance arrangement in superannuation funds, if fund members draw their account down below $6,000 or they remain inactive, as many will, for more than six months they will lose their life insurance. I wager life insurance is not something that most Australians were thinking about two months ago, but I'm quite certain that today it is something that they ought to be thinking about.
We're also concerned about the behaviour of unscrupulous financial advisers. As late as December last year, the Australian tax office was warning about scheme promoters that promise to allow you to withdraw your superannuation early. That was in December last year. We're deeply concerned that this becomes another avenue for unscrupulous advisers—an absolute minority, but, by God, that minority can do a lot of damage in a short period of time. We call on the government and the regulators to ensure that this does not occur. Unscrupulous advisers should not be capitalising on the anxiety and the risky positions that vulnerable Australians are in to earn fees off early cash-out schemes. That is untenable.
Of course there is also a community and a collective risk in this. I've talked about the state of the stock market. The government assumes that 1.65 million Australians will seek access to this scheme: $7,800 in the first year and $8,500 in year 2. We are asking the government to give us weekly reports on the access to this scheme because it will only take a small variance on those assumptions to have a massive effect not just on the individuals, not just on the administrative capacity of the funds and the government bodies administering it but the liquidity positions of funds as well. We need accurate and updated information, all the more because parliament is unlikely to be sitting during the very time when there is a rush on these applications being made.
The only thing worse than a bad idea is a bad idea implemented badly. As we came into the chamber this morning, we learnt that the myGov portal had crashed as thousands and thousands of Australians had rushed online, having lost their job, to make an application for unemployment benefits. Most members in this place would not be aware that it is the myGov portal that is the gateway through which people are going to exercise the provisions of this bill. They don't apply to their fund; they apply through myGov. MyGov hands that application onto the ATO who processes it and then sends it on to the fund as a request for payment. There are so many links in this chain that can go wrong, and that most likely will go wrong, that we urge the government to rethink some of these arrangements. At the very least, they should be staffing the ATO to ensure that they can process these claims properly and they should be ensuring their systems have the rigour.
In addition to that, the funds that are going to have the obligation to pay the fund member once authorised by the ATO do not have the information that is going to be required. The ATO is going to be saying to the fund: 'Make this payment into this member's bank account.' But the funds don't have the member's bank account. This can take weeks and weeks and weeks and weeks to resolve. That's why Labor is calling on the government to look in good faith at the amendments that we are putting before the House today. They are designed to take some of the rough edges off something that we say is a bad idea, but the only thing worse than a bad idea is a bad idea poorly implemented. Unless these issues are dealt with—the issues around financial advice, the issues around information available to the fund and the administration of this—many Australians will suffer. (Time expired)