Wednesday, 2 June 2021
Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
It is a pleasure to follow the contribution of my colleague and his references to my comments. It is instructive to revisit and to understand better the history of superannuation. Many in this place will know that I had a long career in banking and financial services before I entered this place. I understand this space well and appreciate the importance and value of the superannuation system to our economy. As the member for Kennedy and my colleague have outlined, the importance of superannuation to our economy can't be understated. It is now an investment pool of some $3 trillion, invested in a wide range of assets—in the Australian share market, the property market, cash, fixed interest, international investments, infrastructure, agriculture—I will say I sometimes feel like our superannuation industry doesn't invest enough in our agricultural sector and they could maybe take the opportunity to have a look at some of the very good agricultural assets that have been on the chopping block or the selling block of late and maybe have made a more committed effort to keep those assets in Australian hands rather than see them purchased by foreign entities. That being said, ultimately the importance of what our superannuation industry does is it seeks to provide a hope for the future of Australians, and it's there to complement our age pension system. Whilst the original goal and desire of our superannuation system was to see the reliance on the age pension decline over time, I think our Retirement Income Review has made it quite clear that that's not going to happen to the extent that we thought it would. But it's a combination of those two things that I think is critically important.
This bill, particularly schedule 1, where we're talking about ensuring that a person has a single superannuation fund that is going to be there with them for their lifetime, I think is critically important. In my life prior to coming into this place, I had many an occasion where I had clients come to see me who had multiple superannuation funds. The best I remember was eight. It took us the best part of nine months of work to amalgamate those eight funds into a single fund that the client could then utilise for their future. That involved a number of things, not just looking at amalgamating the balance of the fund but importantly also ensuring that with the insurance policies and other protections that were in those various funds that the client was no worse off, that they kept the same levels of cover, that they weren't paying double premiums—all of those things. What I hope with this legislation and this notion that a person has a single superannuation fund is that we don't see that issue arise again, because all those things do is erode the value and the benefits that those members are going to receive at some point in the future when they retire.
My colleague mentioned in his contribution a saving of some $5 million a day. I think that's an enormous amount to go back into individual members' superannuation funds. But it's also important to reflect on the range of things that this government has done over the past few years to ensure that we're protecting members' superannuation, and it's all designed to ensure that we maximise the benefits to members when they retire. We've sought to strengthen the powers of the regulator to deal with underperforming funds, and that's what this bill is, in part, designed to do. But, in addition, we've capped fees on low-balance accounts, which would help some seven million Australians save around $570 million in fees in the first year alone. We've banned exit fees from all superannuation accounts. I can remember when we were trying to amalgamate those eight funds, there were funds that did charge exit fees, which I think was completely unconscionable. For the first time ever we've provided the ATO with the power to proactively reunite low-balance inactive accounts with active accounts. I note in the contributions of those opposite that they didn't mention that there were some of their industry funds who sought to make those inactive accounts active again so they didn't have to be amalgamated. I also note that those opposite, in their contributions, failed to mention that, when last in government, they imposed some $9 billion of new taxes on super and, going into the last election, they were proposing to introduce an additional $34 billion of superannuation taxes.
Through the work that this government is doing, we are seeking to ensure that the amount of superannuation that people can accumulate is to the maximum benefit for their retirement. The Retirement Income Review, which I referenced earlier, found that the Australian retirement income system is effective and sound and its costs broadly sustainable. But it observed that there is room for improvement. This bill is part of that continuous process of looking to improve the system.
In the government's Your future, Your Super package, we are seeking to ensure that members' superannuation follows them when they change jobs. I've had clients who have had a personal superannuation account and then they've gone to work for another employer and weren't able to use that personal superannuation account that they already had, because the employer was tied, through an employment agreement or other agreement, to a particular superannuation fund. That was not necessarily to the benefit of that member, because in the superannuation fund that they already had set up they probably already had insurances and a range of other measures already in place that were planned and structured for their future, and now they were getting a second fund that didn't have those things or didn't have the capacity to have the levels of cover or other things that they wanted in it for their future.
The bill introduces a new interactive online super comparison tool to empower members to make better decisions about who manages their retirement savings. The YourSuper comparison tool will help members compare and select superannuation products that best meets their needs. Importantly, the bill will hold funds to account for underperforming by introducing an annual performance test. These things are critically important for the future of the superannuation system, but particularly for the future of the members in the superannuation system, because, ultimately that is our focus—ensuring that the superannuation benefits that members are going to receive in retirement are maximised.
I would argue—and I know the shadow minister is sitting at the table—that one of the other ways that members could achieve that is to seek professional advice. But what we in this place can do as legislators is ensure that the regulation for the superannuation system is fit for purpose. Many of the other things that we have done in this place have been about ensuring that we seek to achieve that. For example, in passing the Treasury Laws Amendment (Putting Members' Interests First) Bill, we ensured that those with low balances, below $6,000—often young people who do not really follow their superannuation fund or what's going on in their superannuation fund and get their annual statement and stick it in the bottom drawer and really forget about it—would not face the undue erosion of their superannuation balances through inappropriate insurance arrangements and inappropriate fees and charges. We've seen plenty of examples of that.
I know, from looking at a variety of super funds over the years, that, when you actually look at the statement and it says that you're paying a premium for income protection, total and permanent impairment disability insurance or life insurance, you've got to read the fine print because, even though you may have had that cover in there and you were paying those premiums, that didn't necessarily mean that, in the event of something happening, you could make a claim or that you were eligible to make a claim even though you were paying the premium. So I'm proud of the fact that this government has sought to remove those impediments in the system to people accumulating superannuation balances for their retirement. We should be very proud that we are seeking to protect the value of members' balances.
We've also been making changes to make super more flexible, reflecting the individual circumstances of everyday Australians. These changes will not prevent anyone who wants insurance within their super fund from being able to obtain it, but they need to opt in to obtain it in low-balance and young members accounts. I think that is critically important, because, as I've just touched on, insurance in superannuation will not always be what it's presented as being. We're also ensuring that we're keeping members' interests first and foremost during the coronavirus pandemic by allowing Australians access to their superannuation funds where necessary to get them through the coronavirus pandemic. I think that has been extraordinarily well received. Certainly, the feedback in my electorate of Forde is exactly that. It has allowed people who might otherwise have had to make different decisions receive funds out of their superannuation accounts. I note the comments from those opposite in their contributions that it has left some people with zero balances in their accounts. I acknowledge that, but I think that in the context of the past 12 or 18 months the ability of people to access their super to get them through some very difficult circumstances has been critically important. That's actually not an unusual provision for superannuation, because there are hardship provisions within our superannuation system that allow people in certain circumstances to access a portion of their superannuation to get them through those circumstances.
This bill, as part of the suite of bills that this government has rolled out in relation to superannuation over the past few years, is another piece of the puzzle of ensuring that regulation around super ensures that members of superannuation funds have the opportunity to see the maximum amount of super accumulated during their working life to ensure that, in combination with the age pension, if necessary, they will have the lifestyle in retirement that they wish to achieve. If people are to have a level of financial security without the financial stress and pressure of wondering how they are going to pay for day-to-day living expenses—maybe when they retire they want to buy a new car, upgrade some of their furniture, go on a nice holiday and all those sorts of things—it's critically important that we have a superannuation system, in conjunction with our age pension system where necessary, that gives people the hope and confidence that in their retirement they'll be able to enjoy their retirement and live a lifestyle that they wish to live. I commend this bill and everything else that this government is doing in the superannuation space to the House.