Katie Allen (Higgins, Liberal Party) Share this | Hansard source

I rise to speak on this legislation, Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Every day Australian's expect their superannuation fund to work as hard as they do. That is why the Morrison government is introducing a suite of reforms to ensure the superannuation system meets the demands of the modern workforce and is always working to promote member outcomes.

This legislation will ensure the sustainability of the superannuation system going forward by promoting efficiency and guaranteeing the retirement saving goals of Australians and ensuring they protect against vested interest from those who manage their money. In total, this package will save Australians $17.9 billion over 10 years. That's almost $5 million of benefits each day.

This legislation is centred around three key elements. Schedule 1: firstly, we are limiting the creation of multiple superannuation accounts for employees who do not choose a superannuation fund when they start a new job. The amendment specifies that in the situation where a new employee fails to nominate a fund to receive contributions but it is identified that an employee has a stapled superannuation account, then contributions must be made to that stapled superannuation account. Only if a stapled fund cannot be identified may the employer make contributions on behalf of their employee to the employer's chosen default fund. Likewise, employers cannot make contributions in accordance with a workplace determination or enterprise agreement unless a stapled fund cannot be identified.

We are introducing these changes following feedback from stakeholders and recommendations from the Productivity Commission's report Superannuation: assessing efficiency and competitivenessrecommendation 1—and the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry—recommendation 3.5. Currently, if an employee does not choose a fund, their employer must satisfy the superannuation guarantee by making contributions on behalf of their employee to the employer's chosen default fund. However, in the Productivity Commission's report, it was identified that this law led to unintended multiple accounts, which it called a 'structural flaw' of the superannuation system. It fails to meet the demands of a modern workplace, where people routinely change jobs. It also erodes member balances through unnecessary fees and insurance. In fact, I had the experience myself, with a number of different superannuation funds and a number of different fees being paid across all of these different super funds. So I'm actually someone who had this exact thing happen in my life, being someone who worked part time and in different jobs across my professional career.

In sum, it is not user friendly and is not serving Australians as well as it should be—in particular, women, since they are more adversely affected because they often have part-time jobs and are working in a number of different jobs. The Hayne royal commission identified the same issues.

Secondly, looking at schedule 2, we will require APRA to conduct an annual performance test for superannuation products. Beneficiaries must be notified if their product has failed the performance test. Should a product fail its performance test in two consecutive years, the trustee will be prohibited from accepting new beneficiaries. This amendment is also in line with recommendations from the Productivity Commission, which identified that consistently underperforming funds undermine the superannuation system and, ultimately, the hardworking Australians it is designed to serve.

The intention is to assess the performance of superannuation products against an objective benchmark. This will be done by the creation of the government's new, interactive Your Super comparison tool. This will ensure greater transparency for beneficiaries and protection from underperforming funds which compromise their retirement savings goals. The YourSuper tool is expected to boost retirement savings by $3.3 billion over 10 years. It is also important to stress that this amendment is not a toothless tiger. As noted, there are serious consequences for failing the performance test twice: the trustee is prohibited from accepting new beneficiaries.

There is also schedule 3. We are looking to tighten the rules and regulations governing the trustees and directors of superannuation funds, including self-managed super funds, to ensure they are held to a higher professional and legal standard and are always acting in the best interest of the beneficiaries. Among other things, this includes mandating that trustees and directors of superannuation funds exercise their powers in the best financial interest of their beneficiaries. It also involves tightening record-keeping obligations contained in regulations by making contraventions a strict liability offence. This provides regulators with an additional option to respond to compliance issues relating to record-keeping requirements.

Under existing arrangements, trustees and directors are required to promote the financial interests of the beneficiaries, but this obligation lacks clarity and has allowed trustees' and directors' misconduct to fester, as was made apparent in the Hayne royal commission. In line with recommendations from the Productivity Commission—in particular, recommendation 22 of the Productivity Commission's superannuation inquiry—this amendment imposes a clearly articulated, unambiguous and stringent obligation on trustees and directors to act in the best financial interests of beneficiaries. Given the compulsory nature of the superannuation system, Australians expect and deserve their funds to be handled in a way that is centred on securing the best possible outcomes for them.

This legislation forms part of the Morrison government's suite of superannuation reforms, which are firmly centred on ensuring Australians have the best opportunity to be financially secure in retirement. After all, that's what this great system has been built for. We are providing targeted, tangible and practical measures to provide choice and control in superannuation. We've scrapped exit fees that stopped Australians accessing their own money. We've capped the fees on low-balance accounts of less than $,6000. We've bolstered the ability of older Australians who are nearing retirement to streamline their super, allowing them to make up to three years of voluntary contributions in a single year. We've also introduced legislation through the Australian Taxation Office to more proactively reunite the amount of a rollover fund with a member, where they have an active superannuation account. This is all about ensuring the long-term sustainability of the superannuation system, which can only be achieved by ensuring it keeps on working for its members.

I'm particularly proud that we've also made real and tangible adjustments to superannuation for women. The low-income superannuation tax offset has benefited over 1.9 million women since 1 July 2017. The government's superannuation payment of up to $500 to help low-income earners save for retirement has seen over $500 million in super contributions made to eligible women who earn less than $37,000 a year. We've also introduced catch-up concessional contributions. These allow women who may have taken time off over a financial year to have a child or look after a sick loved one to make up their personal superannuation contribution amount in the following financial year.

Last year, during the COVID 19 pandemic, Australians were also allowed to use their superannuation to support them financially through what the world would say were unprecedented times. As the Prime Minister said in March last year when announcing the policy, it is their money, after all. The initiative allowed those financially affected by the pandemic last year to access up to $10,000 of their superannuation early. There was no tax payable on superannuation released under this arrangement, and Centrelink and Veterans' Affairs payments were not affected. It certainly helped a number of my constituents get through a very difficult time, in addition to the other support mechanisms that the Morrison government rolled out, such as the well-known JobKeeper and other initiatives. This enabled more than 3½ million Australians to access their money when they needed it most. For some in my electorate of Higgins this temporary arrangement proved to be a lifeline and helped to keep them afloat during difficult times. Let's hope with the recent Melbourne outbreak that we are going to have a very short lockdown and that we don't have to deal with the financial distresses that were faced by Victorians last year.

On the surface, this legislation may seem complex. However, at its core the goal of this legislation is simple: ensuring superannuation funds work as hard as Australians do. Since superannuation was introduced almost 30 years ago the landscape has changed. The system now holds almost $3 trillion in savings. We are introducing these reforms to ensure it can meet the challenges of the modern workforce and is transparent and user friendly. Importantly, these changes will ensure superannuation funds are always working in the financial interests of their members and not in their own. I commend this bill to the House.

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