Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services I present the committee’s report, incorporating a supplementary report, on the inquiry into the structure and operation of the superannuation industry, together with the evidence received by the committee.

Ordered that the report be made a parliamentary paper.

by leave—Whilst I welcome this very important report into superannuation, I am a bit perplexed that we are tabling it at this time, given the importance of the legislation before the House. I am going to eat into that time, and I am also going to eat into my ability to make relevant comment on such a large report that has no fewer than 31 recommendations. In early 2007, total superannuation assets reached the $1 trillion mark, backed by strong equity markets and a guaranteed flow of money that some researchers estimate could double in size by 2015. This figure is up from $761.9 billion in June 2005, and it is four times the value of superannuation assets in June 1995. So a huge amount of money is under the control of superannuation funds. The future of all of us is in the hands of the industry, and we need to ensure that the law is precise, rigorous and very easily understood.

This inquiry found that a common thread running through evidence from peak industry associations and other stakeholders is that laws and regulations governing superannuation have become too complex and onerous and, in some instances, have not kept pace with industry developments. Some in the industry expressed a view that the legislation is repetitive, clumsy and ambiguous and contains unnecessary definitions. There were calls for comprehensive change to improve the law. The committee shares these concerns. It believes that the legislation needs to be as clear and as concise as possible and should fit the current policy environment for superannuation.

The committee found that, whilst superannuation is something that most people rely on for their retirement, the law is clumsy and difficult and needs to be more clear and concise so that ordinary Australians can understand it. The committee found that the role of financial advice was at the forefront of the committee’s inquiry. Evidence reflected that financial advice needs to be clear, concise, affordable and easily accessible. Overcoming legislative barriers to cost-effective advice is difficult, with advisers not willing to give up their patch and the superannuation industry being hampered in its ability to give simple advice in respect of superannuation. Remuneration is an issue of great concern, as are portability of superannuation, exit fees and loss of superannuation.

Whilst the Labor Party welcomed the report and its recommendations, and we were very impressed by the submissions and by the number in the industry who came along to the hearings, we believe that there were some shortcomings in the recommendations. Labor members of the committee generally believe that the overall governance regime of the Australian superannuation system is very sound. Since the introduction of compulsory superannuation by the Hawke-Keating government in 1987, the size of industry and the funds saved have increased dramatically. The industry has been governed through the trustee system, with sound, effective management of the Superannuation Industry (Supervision) Act and other regulations and improvements over the last 20 years. Nevertheless, there can be improvements in some key areas. Key data, including international comparisons, needs improvement. Much existing law and regulation can be consolidated and simplified. For 5.7 million accounts to be lost, out of a total number of 31 million, is a significant structural failure. Compensation in the event of theft, fraud and employer insolvency—which, although small in the context of total systems, significantly harm the individuals impacted upon; if your super fund is not there when you retire, it will have a huge impact—needs to be improved. There is also significant room for improvement in the self-managed funds sector, where governance regulation and information require upgrading. The Labor Party is on the whole supportive of the report, although there are several recommendations that we do not support.

Finally, Labor was disappointed at the overall emphasis by the chairman, Senator Chapman, on his dispute with Mr Garry Weaven. Indeed, it did seem at times that the whole purpose of the inquiry was to have a go at super funds. It would seem that industry funds—which, on the whole, are governed by employees and employers in a trustee arrangement—are totally abhorrent to the government and in particular to the chair of our committee, Senator Chapman. This coloured the whole committee inquiry. Senator Chapman’s personal dispute with Garry Weaven overflowed to the extent that a reference to a nonresponse to questions is appropriate. However, to attach as an appendix Hansard exchanges from 2004 on related matters detracts from the balanced consideration of the issues by the committee and from the report as a whole. No committee inquiry should be used as a personal vendetta against one individual out there in the super industry, particularly Mr Garry Weaven, who has done so much for the superannuation industry as a whole. To continue to have a go at industry funds that are performing so well and doing so well in their regulation seems puerile. Superannuation is very important—it deserves more time than I have available to me today—and I commend the report to the House.