Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends the Superannuation Guarantee (Administration) Act 1992 to strengthen accountability of superannuation funds and improve outcomes for members.

This bill contains measures that will ensure that choice of fund is provided to over one million more Australians and that salary sacrifice contributions are reflected in members' retirement savings.

It is part of a broader package of government reforms that are squarely focused on protecting members' money, prioritising members' interests and strengthening the foundations of the superannuation system.

The measures in this bill deliver on the findings of the 2014 Financial System Inquiry and address issues identified in the government's Superannuation Guarantee Cross-Agency Working Group report Superannuation guarantee non-compliance.

Choice of Fund

Individual choice of fund is a longstanding, hard-fought-for feature of compulsory superannuation. The government believes all individuals should be able to decide where their compulsory superannuation contributions go.

However, it is estimated that around a million people are covered by federal enterprise bargaining agreements that restrict their ability to choose their own fund.

Providing choice of fund to individuals is a no-brainer. It was a recommendation of the Financial System Inquiry and the trade union royal commission. It was also endorsed in a recent draft report by the Productivity Commission.

In 2015, the member for McMahon also agreed with extending choice of fund when he said in a television interview on the ABC:

… there's a relatively small number of circumstances where an enterprise agreement says you can only go to that fund: that fund alone. And the Government has said that they'd introduce more choice. Of course, that's something which would be fine. Who could argue with more choice for members?

This bill will extend choice of fund by narrowing the deemed choice provisions in the Superannuation Guarantee (Administration) Act.

It will no longer be possible to deny choice to individuals on the grounds that they are part of an enterprise bargaining agreement or similar determination.

Why should a student working two jobs, for example, one in hospitality and one in retail, who is covered by separate enterprise agreements be required to have their superannuation paid to two different funds?

Why should they have to pay two sets of fees?

And likely two sets of insurance premiums too?

Unfortunately, this is not an uncommon scenario. Almost 44 per cent of people have two or more superannuation accounts. Multiple fees and insurance premiums erode a person's retirement savings.

Frankly, it's not good enough.

We want people to be able to make choices about their deferred wages—we want them to be active in making decisions about their future.

And most of all, we want the settings that underpin the system to be focused on their interests—on maximising their retirement savings from the first contribution and throughout their working life.

To be clear, this measure does not prevent enterprise bargaining agreements from specifying a particular fund. It simply allows individuals to choose a different fund, including a self-managed superannuation fund, if it suits them better. After all, it is their money and they should be able to choose where they put it.

Salary Sacrifice

We will also close a legal loophole that has been used by some unscrupulous employers to short-change employees who make salary sacrifice contributions.

Fixing this legal loophole was one of the key recommendations of the government's Superannuation Guarantee Cross-Agency Working Group.

There are instances where employees that enter salary sacrifice arrangements discover that their superannuation has increased by less than they were expecting because employers have used salary sacrifice amounts to satisfy their superannuation guarantee obligation or have based their superannuation guarantee contributions on the lower, post-salary-sacrifice earnings base.

To address these inappropriate practices we are taking steps to ensure that an individual's salary sacrifice contribution does not reduce their employer's superannuation guarantee obligation in any way.

If Australians are to continue to have confidence in the integrity of the superannuation system, we must ensure employers are paying workers their full entitlements, whether they are wages or superannuation.

Prior to finalising the salary sacrifice amendments, the government released draft legislation for consultation.

I want to make it clear that the government is focused on ensuring Australia's superannuation system delivers outcomes for all Australians first and foremost, and is working for them.

A system that encourages people to participate actively and make informed decisions, and one that gives people the confidence that their salary sacrifice contributions will boost their retirement savings as they intend.

I'm confident that the measures in this bill will achieve these outcomes.

Full details of the measure are contained in the explanatory memorandum. I commend the bill to the House.

Debate adjourned.