Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 aims to protect members' superannuation savings from erosion by fees and charges. Of course, this is an objective that Labor is sympathetic to. As the shadow Treasurer said in his remarks to the Press Club in May, 'We also think insurance, opt-in insurance, is a legitimate issue to consider, particularly for young people with low superannuation balances.' Account holders who generally have lower superannuation balances are younger members; low-income earners—predominantly women, unfortunately—and seasonal workers.

Often people with low balances are disengaged from superannuation and do not actively monitor or organise their accounts to minimise erosion of savings. Many people also have multiple superannuation accounts, leading to them paying multiple fees, charges and insurance premiums. At 30 June 2017, over 14.8 million Australians had a superannuation account—so approximately 15 million Australians had a superannuation account—and approximately 40 per cent of those people had more than one superannuation account. Of course, when you have more than one superannuation account often you're paying multiple sets of fees and have two insurance policies covering exactly the same thing—and, therefore, you are paying premiums for both those insurance policies. It's inefficient and, ultimately, it's whittling away investment returns for those members.

This bill aims to protect members' superannuation savings from erosion by limiting fees so that low-balance savings can grow and are protected from disproportionately high fees. It also bans exit fees. This will remove a barrier to account consolidation. The bill helps to ensure that arrangements for insurance in superannuation are appropriate so that members are not paying for insurance cover that they do not know about or that is inadequate in terms of the coverage and are not paying premiums that inappropriately erode their retirement savings. Finally, this bill strengthens the ATO's role in reuniting small inactive balances to reduce the costs to members and consolidate the accounts of members that have accrued multiple superannuation accounts.

More specifically, the bill prevents trustees of superannuation funds from charging certain fees that exceed three per cent of the balance of a MySuper or choice product annually where the balance of the account is below $6,000. It also prevents trustees from providing opt-out insurance to new members aged under 25 years, members with balances below $6,000 and members with inactive MySuper or choice accounts, unless the member has directed otherwise. This is something that some of the super funds have been looking at for some time now. AustralianSuper, the largest industry superannuation fund in the country, actually decided to implement this policy so that members aged under 25 years need to opt in to insurance within their superannuation fund. If they've got balances below a certain threshold, then those provisions kick in as well.

The bill will require the transfer of all superannuation savings with balances below $6,000 to the tax commissioner, if an account related to a MySuper or Choice product has been inactive for a continuous period of 13 months or more. The proposed start date for these changes is 1 July 2019, and the explanatory material reports that the changes are expected to raise savings of $1.75 billion in underlying cash balance terms over the forward estimates and $850 million in fiscal balance terms. The changes in this bill are significant and will impact people's lives and retirement incomes.

While Labor is certainly sympathetic to the objective, we wish to take our time in ensuring that there are no unintended consequences from this bill and to deeply analyse this legislation. In that respect, we are proposing that a Senate inquiry look at the provisions of this bill and their consequences and hear the views of the Australian people regarding them. Some concerns have been raised by employee representatives, by trade unions and by the operators and administrators of particular funds about the potential unintended consequences of removing insurance for people under the age of 25, particularly where they work in dangerous industries, like the building industry or the mining industry. We want to make sure that we're not unintentionally reducing that coverage. It is pretty important for people, particularly once you start raising a family, once you get married and have kids, that you do have an appropriate level of insurance. We all know that actuarial studies and other surveys have indicated that Australians are hopelessly uninsured when it comes to general insurance and, indeed, life insurance. We want to make sure that there are no unintended consequences of this and that it doesn't result in negative consequences rather than what was intended. So, as I mentioned, we will be referring it to a Senate inquiry.

When it comes to superannuation, this government doesn't have a really good record, to be honest. Of course, we remember the government's disastrous 2016 superannuation changes. After Labor led the way from opposition in 2015 and proposed policies to reform superannuation tax concessions, the government spent much of 2015 and 2016 arguing against the sensible changes to superannuation concessions that Labor had put forward. Then, in the 2016-17 budget, the government announced that it planned changes to superannuation, and they were done in a hurry and without consultation. The government's proposed $500,000 lifetime cap on non-concessional contributions triggered widespread concern that the government was making retrospective changes. Yet, the government ploughed on and, in its hurry to get to an early election, the then Prime Minister, when asked if he could foresee any circumstances in which the policy announced in the budget would change following an election, said, 'It's absolutely ironclad.' That was the Prime Minister's quote: 'It's absolutely ironclad.' They said they wouldn't be changing it. But after one of the longest elections in recent times, the divisions within the government became clear. We saw several members of the coalition raise concerns about retrospectivity, which saw the spectacle of some members of parliament threatening to cross the floor and oppose the government's budget proposals if changes weren't delivered upon. While the government eventually, reluctantly scrapped the flawed changes, it was only after it had undermined the confidence in the retirement system that sparked a civil war within the Liberal Party. Given the government's record, we will take our time to look through the proposed changes in this bill carefully.

Not only have the government made a hash out of their tax changes relating to superannuation but they have consistently shown a poor record when it comes to supporting the right changes around superannuation in this country. They voted against the introduction of universal superannuation when it was proposed by the then Treasurer, Paul Keating, back in the 1990s. They voted against every single increase in the minimum rate of the superannuation guarantee, because we all know that they don't believe in the notion of compulsory superannuation. They have never gotten over the fact that industry funds do a better job at managing people's finances than the retail funds and many of the self-managed funds. That's because there are union representatives working with employers on those superannuation trustee boards. The Liberals don't like that philosophy. They have never gotten over the fact that the industry funds do a better job of managing people's finances, in terms of lower fees and better investment performance when it comes to superannuation returns.

The Liberals delayed the scheduled increase to the superannuation guarantee from 9.5 per cent to 12.5 per cent. If we're going to ensure that Australians have an adequate income to retire on, and avoid going onto the pension in later years, particularly those workers who have breaks from the workforce—most notably women, unfortunately—if we're going to ensure that employees and workers retire with an adequate investment pool, through their superannuation, and can avoid going onto the pension, then we need to increase the compulsory rate of superannuation savings in this country. There is a litany of actuarial studies and other surveys indicating that on current trajectories most people won't make it, particularly those on low incomes—that they won't be able to ensure they have an adequate retirement savings pool, after they finish in the workplace, and thus avoid going onto the pension.

So this government's opposition to further increases in the compulsory superannuation rate is really damning for the budget, as far as increases in outlays associated with the pension are concerned. It therefore reduces the potential for us to run surpluses in the future and to fund programs that will be important, particularly aged care and other programs associated with an ageing population, like Medicare and properly funded hospitals and aged-care beds. So we need to be looking at increasing the compulsory rate of superannuation in this country, but this government has delayed it. On every occasion on which they've had the opportunity to vote for these changes, they have voted against them. They abolished the low-income superannuation scheme, and then they reintroduced it, but only under pressure from the Labor Party and from some within the industry. They reintroduced it one budget later. I think they got rid of it in the 2014 budget, and then in the 2015-16 budget they reintroduced it and renamed it the LISTO.

They undermined our superannuation system with their First Home Super Saver Scheme, which will do nothing to address housing affordability. More recently, the government has proposed a superannuation amnesty that would give a penalty holiday to employers who have not paid superannuation to their employees for as much as 25 years. The notion that under this government people who have broken the law for 25 years will be able to get away with it is completely ridiculous. Imagine if you rocked up to the tax office one day and said: 'You know what? I haven't paid income tax for 25 years. I haven't paid company tax for 25 years. I want you to give me an amnesty.' That is exactly what this government is doing with superannuation. Employers who haven't paid superannuation to their employees, which they are required to do under legislation, and for which there are quite harsh penalties, will be given an amnesty by the government. Labor, of course, has expressed its opposition to this proposal. Superannuation theft is exactly the same as wage theft. Why should dodgy employers get away with stealing hard-earned money from their employees?

In contrast, Labor has a very different philosophy when it comes to superannuation. We all know that it was the Labor Party that built the compulsory superannuation system. It has now developed into the third-largest savings investment pool in the world and it is one of the reasons that our economy had a buffer to protect Australian workers from the ravages of the global financial crisis in the wake of 2008. It was Labor that introduced universal compulsory superannuation. We proposed and legislated all of the increases to the rate of the superannuation guarantee. They were all opposed by the coalition.

Labor introduced the low-income superannuation contribution scheme, under which low-income earners would effectively not pay tax on their superannuation guarantee contributions. We introduced MySuper, the new, simple and cost-effective default superannuation product. Labor made it easier for small businesses to pay their super through the introduction of the Small Business Superannuation Clearing House in 2010. Labor led the way in reforming the payments system. The introduction of SuperStream in 2012 fundamentally improved the superannuation system experience for fund members, employers and funds.

Labor is the party of superannuation, and we'll be checking the bill, as I mentioned earlier, for unintended consequences and to consider whether there are better ways of achieving this objective. We'll take the time to consult with stakeholders and to explore concerns that have been raised, including: that the removal of default insurance could lead to members with high-risk occupations, and others with families and mortgages, becoming uninsured or underinsured; that the changes could lead to an increase in premiums; and that the transfer to the ATO of accounts which have been inactive for 13 months could lead to lower returns for members. We also need to ensure that the changes to the fees will not be able to be circumvented through an increase in other charges.

In conclusion, the objective of trying to protect the balances of people with low balances is one Labor is sympathetic to, but we'll take our time to work through these measures in this bill and we'll reserve our position on it, including on whether any amendments are required, until after the Senate Economics Committee inquiry into the bill has reported.

Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

The member for Kingsford Smith has done what Labor do so well: he has said that he is sympathetic to this bill that protects people's hard-earned money, their superannuation. The Labor Party are sympathetic, but what are they going to do? They're going to kick the can down that time-honoured road of analysis paralysis. There they stand, saying: 'We, like the government, believe in protecting super, and you know what we're going to do? We're going to analyse it even further, because there might be unintended consequences, and the Labor Party don't like springing surprises and don't like governing at speed.'

This is at a time when the Leader of the Opposition has surprised everybody, including his own caucus and front bench, with a complete reversal of tax policy. Now they're going after small and medium businesses. This is not just a denial of a tax cut to small businesses; these tax cuts have already been legislated for recently. This is an attempt by the Labor Party to collapse confidence in our economy. It is an attempt by the Labor Party to tax one of the values that this side of the House drives: aspiration. It is a clear tax on aspiration, and the Labor Party has the hide to stand in this chamber and hold back this bill, claiming that it wishes to have further analysis.

The only other bill the member opposite tried to attack was legislation debated in this House last week on providing an amnesty to employers over a 12-month period to pay superannuation that was due but not paid. This is an opportunity for 50,000 Australians to recoup the money they have earned. Did the Labor Party support that? No, they did not. An opportunity for employers to voluntarily fess up, the ones the government isn't already onto, and for over $200 million to go back to the workers—did the Labor Party support that? No, they did not. They want to kick the can again down the road and not deliver. We on this side of the House, the coalition, are different. We stand for many good and noble values firmly planted in the liberal tradition of free enterprise, personal freedom and the rule of law—not least among them is the right to aspire to be the very best you can be.

Key to any society that truly values and promotes such aspiration is one essential ingredient, and that ingredient is confidence—the very thing those opposite are trying to collapse in our economy. We share confidence in a strong Australian economy, an economy now in its 27th year of consecutive growth. It is an economy that creates jobs, thousands and thousands of new jobs, under this government. Last year we averaged more than 1,100 jobs every single day. Now, over one million jobs have been created since the coalition came to government less than five years ago.

Then there's another level of confidence: confidence in good governance, confidence in fairness and confidence in that notion of the Australian fair go. It's this level of confidence deep within the economy, at the level of institutions and individuals, that motivates Australians to have a go, to have a crack, to work hard, to invest, and to better leverage their means to expand their enterprises and themselves. This is where the jobs and the growth ultimately come from, and it's something that the Labor Party never seems to understand.

Labor thinks that if we have big taxes, big spending and big unions then everything will just fall miraculously into place and we'll arrive at some economic nirvana, where the iron laws of arithmetic are suspended and magic must just happen. In the real world, a strong economy doesn't just happen. It takes good government. And good government in this country empowers the efforts of all Australians through lower taxes and better protections for their wealth and their wellbeing.

The Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 aims to do just that. You see, this bill is part of a wider suite of targeted reforms under this government—reforms that safeguard and sustain Australia's huge $2.6 trillion superannuation sector. The reforms introduced into this parliament will improve the governance, transparency and accountability of superannuation funds, while additional reforms will protect Australians' hard-earned savings by ensuring that all workers get their superannuation guarantee entitlements on time and in full. The Turnbull government—led most ably by the Minister for Revenue and Financial Services, who said she was not going to wait for the industry to do this—has taken resolute action to protect the superannuation savings of millions of Australians from undue erosion due to excessive fees, inappropriate insurance premiums and the inefficiencies of people having multiple accounts.

Firstly, I will look at excessive fees. This bill will prevent the trustees of superannuation funds from charging administration and investment fees that together exceed three per cent per annum of the balance for accounts under $6,000. Trustees will likewise be banned from charging exit fees on all super accounts. I'll say that again, because I love this part of the bill: trustees will be banned from charging exit fees on all superannuation accounts. The benefit of these measures is twofold: preventing low-balance superannuation accounts from being just eaten away by high fees, and, at the same time, removing a clear disincentive to account consolidation and rollovers. The benefit, which is expected to flow to approximately seven million hardworking Australians and is estimated to save them about $570 million in the first year alone, should be obvious to almost everyone—everyone except those opposite and, in particular, the Leader of the Opposition.

Back in 2013, when the Leader of the Opposition was the then superannuation minister, he deliberately removed protections for low-balance super accounts. These measures address the appalling consequences of the Leader of the Opposition's decision when he was the minister. And he didn't stop there, by the way. In addition to removing protections for low-balance accounts, the then minister, today's Leader of the Opposition, also required trustees to provide automatic insurance products on an opt-out basis, further eroding member account balances, with little or no real benefit in many cases. In so doing, he effectively ripped through the retirement savings of millions of Australians like a wrecking ball. Therefore, to make good on the hapless legacy of the Leader of the Opposition, this bill seeks to address issues associated with the current default insurance arrangements in superannuation accounts—more specifically those accounts held by younger Australians aged up to 25 years or members with account balances below $6,000 or whose accounts have been inactive for 13 months or more. In these cases, schedule 2 of the bill will require that insurance is only offered on an opt-in basis.

Voices within the industry, including the Financial Planning Association of Australia, have pointed to a potential underinsurance risk for young Australians and suggest that total and permanent disability cover—TPD, as it's typically referred to—coverage should remain as an opt-out policy to ensure adequate injury protection for young account holders. While this suggestion could be dismissed as self-interest, the government has carefully considered such advice and has designed the measure to ensure there is no disadvantage, so that any member can easily obtain or maintain insurance cover to suit their real needs and personal budgets. These changes have been estimated to give about five million Australians the option to save a total of up to $3 billion in unwanted insurance premiums annually.

Finally, schedule 3 of this bill will enable a more effective and timely mechanism whereby the ATO may proactively reunite and consolidate inactive accounts that are without insurance cover and have balances under $6,000. This measure in the first year is expected to reunite around $6 billion with the active accounts of about three million members. While the current system for recovering lost super will remain in operation, these new measures will significantly supplement and streamline those existing arrangements. Collectively, all the measures announced in this bill are specifically designed to restore protections lost under Labor—to protect the retirement savings of hardworking Australians against excessive account erosion and to prevent low-balance accounts from being eaten away to nothing by excessive fees, unwanted and inappropriate insurance and multiple accounts that compound inefficiencies and cost to account holders.

This government, the Turnbull government, believes strongly that the superannuation savings of Australians are their money—the Australians' money, the workers' money—and that money deserves to be protected and allowed to grow. For these reasons, I commend the bill to the House.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I rise to proudly support this bill, the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018, because it is part of a package of economic bills introduced by this government that seeks to honour the savings, the hard work, of Australians. Deputy Speaker, you may be aware, if you read through my speeches in this place—and maybe one day, like the former member for Fairfax, I might even publish a tome which will end up in the future member for Fairfax's office or perhaps corridor—that there is a consistent theme in every speech I give: the importance of people's freedom and a greater sense of intergenerational justice, where young Australians seeking opportunity are able to secure the chances they wish for in life but, equally, where security is provided for older Australians who are in a position where they can't change their circumstances.

We know, on this side of the House, that superannuation is part of that rich matrix of providing both opportunity and security at different stages of life. But there are thousands of young Australians at the moment who, under the legislative regime, have money taken out of the balance of their superannuation accounts to feed the interests of financial services companies—sometimes banks and sometimes many other agents—who want to extract the value of the hard-earned savings of those young Australians for their own benefit.

I have had constituents come up to me over time and complain about their low-balance accounts, particularly those of young people at the start of their working life, and how the value of their superannuation account balances is being extracted for the benefit of insurance payments that they don't seek, wish or want, because it doesn't reflect their stage of life. All it does is remove the value of their account to the benefit of the companies that hold their balances. Many of the constituents who have raised this with me haven't just raised it in an esoteric way. They've watched themselves or their young children who have got their first job lose the value of their superannuation account balance through these fees and insurance premiums. When you put that in the context of what the Leader of the Opposition did when in his previous role in government, when he deliberately designed mechanisms within the superannuation system to encourage the raiding of young Australians' superannuation accounts, not only does it raise an eyebrow but it also raises the question yet again: does he act in the interests of workers or does he act in the interests of his union friends, allies, comrades, financiers and sometimes acolytes? That is ultimately what this bill is trying to address. It is actually putting consumers and workers at the centre of the superannuation system, not the industry funds run by unions.

It's a pretty straightforward proposition, which is perhaps why the opposition is so relativist on this piece of legislation. Perhaps the opposition leader and those who surround him, those who sit on the other side of this chamber, in a choice about whether union-controlled superannuation companies should be able to raid and extract every single cent of value out of the superannuation accounts of young Australians and whether funds should be provided to finance the interests of union-backed superannuation funds, are choosing the interests of their union mates yet again. That's what it looks like to me, and I suspect that's what it looks like to thousands of young Australians whose superannuation accounts are being raided by the types of regulations in law at the moment, which were unjustifiably introduced by the Leader of the Opposition and at their expense.

It is true that there is a very important role for superannuation and people being encouraged to save for their retirement, no matter at what stage of their life. It is also true that underpinning a strong economic environment where people earn wages and contribute to their superannuation accounts is a strong economy. Of course, we know that, under this government, we have made a strong economy the primacy of our focus, because when we deliver a strong economy a human, social and environmental dividend comes with it, as well as an economic dividend. But, of course, a strong economy also heavily depends on having certainty in the market and, in particular, the legislation and regulation. We know that we don't have that with the opposition leader and the legislative agenda that he would aspire to introduce.

I was reminded of that only this morning when I spoke on a program on 2CC Canberra radio, where the interviewer, Tim Shaw, was asking the member for Canberra simple questions like:

Do you agree and do you support your leader in the winding back of tax cuts for medium business that he announced this week?

And time and time again the member for Canberra dithered and couldn't answer the question. It was like the member for Bass the day before—in fact, it was Bass squared. Her answer was:

We are continuing to consider businesses up to $10m turnover but we have always been crystal clear that we put schools and hospitals ahead of tax cuts for big business and the banks.

That's the standard line, the rhetoric. It has obviously been poll tested. It's not actually sincere. Then the interviewer, Mr Shaw, was quite right in saying:

Gai—

or, as we refer to her, the member for Canberra—

I asked you specifically, do you support Bill Shorten's position when he said 'yes' to the winding back of tax cuts for medium businesses? And I remind you that you are a former small business person yourself.

She responded:

Yes I am and a proud former small business person—

good on her on that. She went on:

… as I said, we are continuing to consider … up to $10 million turnover.

Mr Shaw responded:

So the leader was wrong to announce to the media that, yes, the policy of the Australian Labor Party was to repeal already L.A.W. law tax cuts for small business?

The member for Canberra said:

Well there has been internal discussions on this issue, those discussions continue …

And the interview goes on—train wreck day 2.

In the end, we now have an opposition that clearly doesn't understand the importance of a strong economy or the interest of how it delivers for Australian workers and everything else. But the Leader of the Opposition no longer even enjoys the support of his party for his economy-wrecking agenda. I would hope that, when you see a Leader of the Opposition pushing forward an economy-wrecking agenda—whether it is repealing tax cuts, taking money out of the pockets of hardworking Australians, or it is potential meddling in industrial relations, or it is an economy-wrecking emissions reduction target; whatever the economy-wrecking position he takes—at some point the members opposite would actually stand up and defend the rights and interests of ordinary Australians and particularly workers.

That is why they should be supporting this piece of legislation—not the moral relativism that they engage with in the speeches in this place but actually supporting a cap on fees so that young Australians in particular do not have their superannuation accounts raided by union-backed superannuation funds. They should be supporting a piece of legislation that says that, if you do not want an insurance premium, you should have the freedom to choose not to get one from the get-go. You shouldn't have to find out that all this money has been taken out of your account before you turn around and say: 'Actually, I don't think that's right. At 16, I'm not sure it's actually a good financial decision to get a life insurance premium.' It might be, later, but not when you're only earning a few thousand dollars and you certainly have a superannuation account balance of less than six grand.

That's what's at the heart of this piece of legislation. It's just making sure that young Australians and those people with low, duplicate accounts don't get their money raided by the unions. Imagine that! I would have thought that this is a relatively straightforward proposition for everybody in this parliament to support, except for the fact that we know it will be going against the direct agenda of the Leader of the Opposition and the Labor Party in the past, who have actively supported raiding those accounts.

This bill seeks to do very sensible things. It does not require a genius to be able to stand up and realise that the principal benefits of this legislation are for those seeking their opportunity on their way up. They might have multiple accounts and have multiple jobs. They may have low balances because they have not contributed very much over the years, because they have started at a very small base at the start of their career.

But never forget, Deputy Speaker, that there is another big group of Australians—in fact, the majority of Australians—who will gain and secure the benefit from this piece of legislation. Rightly, there has been a focus on the low balances of women in their superannuation accounts, particularly as they enter retirement age, certainly in comparison to men. We all know that there are multiple factors that drive that. But, because superannuation is often one of those matters that are heavily debated, particularly when you see family breakdown or marital breakdowns, women have been exposed to some of the worst cases of egregious gouging because of life circumstances. I never want to get into generic and overgenerous assessment of people's individual circumstances. Every person's life is different. But the other core group of Australians who will benefit from this legislative reform is not just young Australians seeking their opportunity, in that their superannuation accounts will not be raided by union interests; it is women who will get the benefit of this reform.

It saddens me no end that those on the other side of this chamber, who could be supporting sensible, pragmatic reform to support young Australians and women, have chosen to put the interests of their union mates against those of Australians. They have chosen to support those people who fund their campaigns—to support those people who organise and rally to get them elected. Sometimes there's a thing in this parliament where we should rise above the interests of politics and look at the future of the nation. If we say that we are going to sell out young Australians and women, in particular, by keeping in place an unjust, unfair form of legislation and regulation that undermines their interests to the benefit of big-union established interests, the modern Labor Party no longer has any claim to understand what justice means in a free society.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I'm particularly pleased to be talking on the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 today because some of the young people who will be affected by our measures in this bill are actually sitting up in the viewing area. They are the wonderful young people from Busselton Senior High School, who are here in the chamber gallery today. I welcome them and I really hope they enjoy their time here today and make the most of this opportunity. It's a long way to come from Western Australia, and they've done exactly that. They're most welcome. I'm really pleased that it is young people like these young people sitting here today who will be the beneficiaries of this legislation. It will be young people and, as we heard from the previous speaker, women, in particular.

We're taking action to make sure that these great young people here will be able, when they go to work, to retain more of their own money, ensuring that these young people retain that through personal income tax cuts as well as through the decisions we are making in this superannuation bill. They will actually be able to keep more of their money, particularly when they're on low incomes at the beginning of their careers. But I'm equally hoping that these young people sitting in the gallery today will take a personal interest in their own superannuation when they go to work. I hope that they will actually take an active interest in what's happening with their superannuation.

Of course, this bill fixes yet another Labor mess: the decision in 2013 to abolish low-balance protection as part of the MySuper changes. Low-balance accounts were very vulnerable to changes through erosion by fees and charges. But, under this particular piece of legislation, we're going to prevent trustees of super funds from charging administration and investment fees exceeding three per cent per annum on the balance of superannuation accounts below $6,000. This is really important for people on low incomes. There are around seven million Australians who will actually save around $570 million in just the first year of this change. That's just extraordinary. The actual figures involved in this are just extraordinary. That's an extra $570 million that will be retained in superannuation for hardworking Australians, helping them to earn more interest and to accumulate more savings for their senior years.

The senior years are not something that's going to affect you young people from Busselton for some time, but, when you get there, I want you to have as much in your superannuation accounts as you possibly can. These measures today are going to help with that. They will prevent trustees from charging exit fees on any superannuation product, no matter what the balance is. According to APRA data, one-third of funds charged an exit fee in 2016-17—that was a total of $52 million across the industry. That's another $52 million of your own funds that will be retained. I think that's great news.

The bill addresses the provision of insurance through superannuation. When you're young, life insurance may not be your top priority. But, when a significant proportion of retirement savings—sometimes an entire balance—is eroded by insurance premiums, it certainly is an issue. Again, this was part of the opposition leader's MySuper default, with automatic insurance on an opt-out basis rather than an opt-in basis. I can't understand why the Leader of the Opposition would have made that decision knowing how badly it would affect—and has affected—those lower paid workers. We will ensure that members who are at the greatest risk of seeing their account balances eroded will not have to have insurance provided on a default basis. It will be on an opt-in basis for members with balances below $6,000, accounts which haven't received contributions for 13 months or more and new members from 1 July 2019 who are under the age of 25. These changes will affect around five million people, with the option to save an estimated $3 billion in premiums a year. What we're doing is giving people choices and options. This is something that is in our DNA. We actually believe in people having choices and having control. This is a really important issue. I encourage people—and these great young people in the gallery today—to take a direct interest in and know exactly what's happening with their superannuation because many people do not. We recognise that some don't take that interest, but we need to make sure that, irrespective of whether people take a direct interest or not, their interests are reflected and they retain as much of their earnings and their superannuation as possible.

A million workers need to have their say on superannuation and their choice of super restrictions, which have been affected and restricted by EBA directions. But in these days of people changing jobs, many millions of Australians have multiple superannuation accounts. Young people in Busselton could have multiple changes of jobs in their lifetime. We want to make sure that, irrespective of how many times they change their jobs, they are able to consolidate that superannuation into an account where they'll know exactly how much they have at their disposal. It's interesting that, of the 14.8 million people who have a super account, 40 per cent of them have more than one account and around 176,000 people actually hold six or more accounts. They need to bring them together. That leads to tens and sometimes hundreds of thousands of dollars less at retirement. When young people retire, they're going to want every cent so that they can do the things they want to do when they're at a more mature age. I want to see that they get that.

Through this bill, the Australian Taxation Office will be given the opportunity for the first time to proactively return the balances of inactive accounts that people might have from past jobs—but they may not know where that super is—to the people who earned it, along with existing unclaimed super moneys. That's what we want. We want your money to stay with you, like personal income tax cuts. The ATO estimates it'll be able to do this within a month of receiving the funds. Like a lot of these young people, one of my staff has had five jobs in 20 years in both the private and public sectors. He did a super search to see what was out there that he didn't know about and he found over $78,000 in a lost super account. Isn't this a great reason for young people to take a very direct interest in their superannuation when they go to work? Make sure you know what's there and that you take control of that. This is a very big issue for one of my staff, and this is a practical example for anybody watching or listening as to why you need to make sure that you know what's happening with your super.

I congratulate the minister for her efforts in getting this particular bill together. We're going to see a lot of Australians in the first year—three million people—automatically getting their money back, being reunited with $6 billion of their own money. What a fabulous outcome! It's a fantastic outcome by this government that we're going to see three million people reunited with $6 billion of their own money. I commend the bill to the House.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

I too would like to make a contribution on the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018. We will be giving qualified support to the passage of the bill through the House. Our position on this bill will be subject to the findings of the Senate Economics Legislation Committee. We want to make sure that this bill delivers what it purports to do and that there are no unintended consequences. Labor will always act to support the hard-earned savings of Australians. As it stands today, superannuation has $2.6 trillion under investment. That's $2.6 trillion of assets for mums and dads out there. I don't know about these young people, but I don't know how many noughts you've got to put on 2.6 to get a trillion—they'll probably work it out for us, Mr Deputy Speaker. But we will always take the side of the workers in ensuring the safeguarding of their earnings and their superannuation, and we will be part of any attempt at legislation that delivers safeguarding from inappropriate fees, insurance arrangements and the inefficiencies that result, as at present, from multiple superannuation accounts.

The more superannuation accounts are out there for a single person, the less accumulated savings are going into that person's asset base for the future. This is particularly so when we consider young people who may be working casual jobs, low-income earners who may move from one job to another, women who may take periodic breaks in their career and, particularly, seasonal workers out there moving from one regional location to another, whether they're cherry picking, working on vineyards or doing other things. The tendency is that those people are more than likely to have multiple superannuation accounts. Treasury analysis in 2016 showed that, at 30 July 2016, there were 9.5 million superannuation accounts in this country with a balance less than $6,000. That accounts for 40 per cent of all superannuation accounts. The ATO, whose role in terms of superannuation this bill will strengthen, found in their super accounts data overview in 2017 that 14.8 million Australians had superannuation accounts, but 40 per cent of those people were holding multiple accounts. If that money could be put into one account, the growth rate would be increased and therefore the asset base for retirement earnings would be similarly increased.

As I say, we will always defend superannuation. We know on this side of the House that superannuation, together with a means-tested and government-funded age pension, forms an integral part of a person's retirement earnings. Australians now rely on it. I advise everyone not to forget that it was the Labor government that created the Australian superannuation system. We are the party of superannuation, and we'll always stand in this joint to defend it. Labor understands that superannuation is now the second biggest saving vehicle of any household. Apart from the house itself that people will purchase and live in, superannuation is already the second biggest asset base and will grow into the future. Seventeen per cent of the household asset base is currently based on superannuation alone.

I'd like to remind everybody that, if it weren't for a Labor government, we wouldn't have universal compulsory superannuation. Universal compulsory superannuation had its initiation, in the first iterations, as a trade-off for productivity. It was award based. I know our colleagues over there don't like talking about awards, enterprise agreements or trade unions, but it was a trade union initiative that forwent a four per cent increase in the productivity payment for, at the start, three per cent compulsory superannuation. It has grown from there. By the way, every measure of growth in compulsory superannuation, which now stands at 9.5 per cent, has been opposed by the coalition. Labor have supported every increase in the rate of superannuation guarantee. It was a Labor government that introduced the low-income superannuation contribution scheme. I remind those opposite: don't forget that you came here under directions from your then leader and repealed that legislation, which gave a measure of support to people on low incomes. You repealed it, only to find out that that wasn't particularly electorally popular and you had to reinstate it. It was the Labor government that brought MySuper—a new, simplified, cost-effective default mechanism—to superannuation products. Again, that was an effort to streamline it and make it a more effective payment system. And, further, it was also a Labor government that in 2012 brought in the SuperStream, which fundamentally improved the superannuation system and the experience that people, would have as members of a super scheme, not only for employees but also for the employers and the funds themselves.

We will always hold this government to account, particularly on matters that involve employees and workers. Those opposite would like you to believe that they have changed their stripes and they are now all about what's best for workers. This is the party of Work Choices, the party that made it legal for the first time in our history to pay people below an award rate of pay, and they would like us to believe that they've changed their stripes!

Don't forget that, back at the 2016 election, they had a policy of a $500,000 lifetime cap to non-concessional contributions. It triggered widespread concern, because people were being encouraged to contribute to superannuation but this had the aspect of retrospectively opposing this restriction, which would fundamentally change the saving plans for many households. But the government at that stage made it very clear that they weren't up for changing. The Prime Minister gave what he described as an ironclad guarantee, and, lo and behold, what did they do? Just like with the low-income superannuation contribution scheme, they backflipped. They didn't backflip because they thought it was a bad idea; they backflipped because of the pressure that came from their Liberal Party base, who thought, 'You are now retrospectively diving into our retirement funds, and we've caught you out.'

They also made further inroads into superannuation—and you could probably put it kindly by saying 'unwittingly'—making another regressive aspect to superannuation with the introduction of the First Home Super Saver Scheme, which allowed people to use their superannuation to buy their way into the real estate market. That was maybe a noble objective in the first place, but it was one which did not have regard to what it would do to the intention of superannuation in providing reasonable retirement earnings for people. And, by the way, it would have absolutely no effect at all on the affordable housing crisis, particularly what's being faced in Melbourne, Sydney and Brisbane.

Only last week, there was another thought bubble that came from those opposite. They thought it would be wise to give a 12-month amnesty to employers who failed to make superannuation contributions on behalf of their employees for the last 25 years. Ordinarily, if you didn't pay your tax for 25 years, you would get a penalty. If you didn't pay your superannuation under current law, you would be penalised; as a matter of fact, you'd be penalised 200 per cent. Wipe all that! They're now saying that, under this amnesty, if you want to declare yourself and become an honest broker after 25 years—'Mea culpa; I haven't paid my employees properly'—you've got 12 months to rectify it. But what's unbelievably worse is that they will give that employer a tax deduction on the contributions they make. They're not just going to say, 'Don't do it again.' They're going to give them a tax deduction!

Just compare that to what the treatment would've been if an employee had been ripping off their employer for the last 25 years. They would probably be summarily dismissed in the first place once they were caught, and it is highly likely they would be fronting up before a court on some criminal charges of theft or whatever. So they're happy to look after dodgy employers and reward them with a tax deduction, but not so when it comes to workers.

The former speaker said looking after people is in their DNA. Well, for some of us on our side, looking after people has been in our DNA. I don't mind admitting that, like many on my side, we were formerly workers' representatives. We are working and advocating for workers' rights and looking after them as members of the trade union movement. I actually wear it as a badge of honour, but they want to create a slight about that.

Just think back: when was the last time you ever heard a positive word said by this government about a union or about a union official? I don't know if you can remember it, but there is one time. They spoke about Kathy Jackson, the then National Secretary of the Health Services Union. According to the Leader of the House and the Prime Minister, she was the hero of the trade union movement. She was the defender of workers' rights, a person we should look up to. They used a word: she was a 'doyenne' of the working class. Poor old Kathy at the moment is facing court on corruption charges in Victoria. Adverse findings have been made by the trade union royal commission, which they set up. But that was their hero of the working class. It was not someone who is going out, looking after people, looking after low-income earners and making sure their welfare has been looked after. They pick someone to hold up as an exemplar of trade union official, and the only example they ever have picked up to do that is, as I say, currently defending criminal charges resulting from corruption allegations.

The provisions in this bill, as I said at the outset, are good. We certainly want to be guarded against any unintended consequences. We want to make sure that we do not unnecessarily complicate things for people in high-risk occupations, see a possible increase of insurance premiums or make any change that would result in lower returns for members. We think we need to do everything to protect employees' savings and, in particular, superannuation. Superannuation, quite frankly, I think is one of the key initiatives that were brought in within our generation. It is a mechanism that we should be encouraging all people to be part of, not simply with their own contributions but looking to prop those up where necessary. It's not just about bringing people away from the concept of welfare or being on the old-age pension; it's a matter of making proper provision for their life in retirement. This is a matter of decency. It's a matter that we will always support on our side of politics, and I would caution those opposite to be more restrained when they refer to trade unions. (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

I have to admit that I do like the member for Fowler. There's much in his contribution that I could speak on, but, in the interest of staying focused on the bill before us, I won't do so. But I will just outline a couple of things for the member for Fowler and his colleagues over there to consider. One of the reasons we're discussing the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 is that in 2013, as part of the MySuper changes that those opposite legislated when the Leader of the Opposition was the Minister for Financial Services and Superannuation, they removed the member protections for small-balance superannuation accounts. I haven't heard those opposite mention that in their contributions this afternoon. Those standards protected accounts with balances of less than $1,000 from erosion via fees by ensuring those fees could not exceed the earnings of the superannuation fund. Whilst those opposite talk about protecting people with low balances, in reality when they were in government they did exactly the opposite. As is said many times in this place by my colleagues, it's not about what those opposite say; it's actually about what they do.

This bill is a great step in protecting the hard-earned superannuation contributions of working Australians. They're hard earned because, as the member for Fowler outlined, initially super was a trade-off for a wage increase. Now, with 9½ per cent of people's earnings going into superannuation, for the majority it is their second largest investment, behind their home. It is critically important that we have a system and framework that protects those funds from erosion via unnecessary fees and charges or, in some cases, inappropriate insurance.

The other interesting comment the member for Fowler made was around the importance of super in EBAs. Mandating a superannuation fund in an enterprise bargaining agreement means those employees have no choice whatsoever about where their superannuation goes. Nearly a million employees in Australia have no choice of where their superannuation goes. If they already have a personal or other fund and join an employer that has an EBA, they cannot have that employer put their superannuation into their existing fund. So what do they finish up with? They have multiple funds. We know that some 40 per cent of Australians have more than two funds.

In my experience prior to coming to this place in 2010 I had a client who had eight different superannuation funds, including the one into which contributions were being paid. It took nine months of working with that client and the various superannuation funds to consolidate all of that super into the one fund into which his contributions were going, but in the meantime all of those other funds were collecting fees and insurance premiums. In a number of cases, in those funds where he had income protection cover, he wasn't able to claim on any of that income protection cover and therefore was paying a premium for something he wouldn't ever have received. He wasn't getting any service, advice or anything like that from those funds. They were all funds with small balances. At the end of the day once we tallied them all up it was maybe $9,000 or $10,000.

These are the people this bill is seeking to protect. The measures in this bill, particularly around improving the capacity of the ATO to receive those low-balance superannuation accounts—those below $6,000 that have been inactive and are without insurance—are critically important. The bill will empower the ATO to proactively obtain those funds, then work through its systems to transfer those funds to an existing fund for that member.

Equally, it is important that where we see funds with a low balance—and we've set that limit at $6,000 in this bill—we provide the opportunity, where people are under 25, for default insurance arrangements not to exist on an automatic acceptance basis. Those superannuation members can always opt in to obtain insurance cover. It's about those first few years of accumulating your superannuation fund. When you start out in the workforce, there are two important things: the risk of multiple accounts and the risk of insurance cover that you don't necessarily need or that is way above what you need, and consequently paying unnecessary premiums. There is also a risk, as I've seen in many product disclosure statements, that even if you do have that insurance cover in your fund, particularly with income protection—less so with death and total and permanent disablement—you can't even claim on the income protection policy or, in a lot of cases too, death and total and permanent disablement cover, because you do not meet the relevant thresholds for making a claim within the fund. So why is there a situation where people are apparently covered for something and paying for something that they have no ability to access in the event they actually need it?

I don't think that that is a system that benefits hardworking Australians who are trying to save and accumulate super for further retirement. As has been rightly pointed out by a number of speakers in this place, we want to see people's superannuation grow and accumulate so that they have more in their superannuation funds when they retire, thereby ensuring that the requirement of government for age pensions is reduced. That was the original purpose of superannuation. It was to allow people to accumulate wealth in a tax-advantaged environment where they couldn't touch it until they were age 65—or age 55, in some cases—so that the requirement for the government to help fund people's retirement through the age pension would be reduced. We recognise as our population is getting older that the number of people actually working to support our social security and our age pension system is reducing. So the tax revenues are not necessarily there. That is the whole purpose of superannuation. The more we can do at the outset to create a superannuation system that protects those balances when they are small and ensures that the number of accounts that people have is kept to a minimum, the better it will be for those people in accumulating that superannuation and that wealth for their retirement. I commend this bill to the House. I think it's a tremendous example, again, of what this government is seeking to do to protect people's savings, allowing them to grow wealth and prosperity for the future not only for themselves but for their families and the country.

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

Firstly, I'd like to thank those in the chamber who have contributed to this debate. I particularly thank the member for Forde, who preceded me in speaking, for his passionate advocacy on behalf of so many superannuants. I am a bit disappointed that those opposite have not taken the opportunity in this chamber to back millions of Australians and their superannuation savings by giving support to this bill, the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018. We have heard from them a number of weasel words where they are squirming to try to maintain a position where they are of course protecting vested interests. Let's be very clear on what this bill does. This bill demonstrates the government's commitment to put members first and protect their hard-earned retirement savings from erosion through excessive fees, inappropriate insurance arrangements and the inefficiencies which result from having multiple superannuation accounts.

Schedule 1 to this bill prevents trustees of superannuation funds from charging administration and investment fees exceeding three per cent per annum of the balance of accounts below $6,000. Those listening to this debate will recall that there was a time when there were caps on fees. It was when the Leader of the Opposition was the minister responsible for superannuation that we saw fees become uncapped for low-balance accounts—accounts of below $1,000. This schedule also prevents trustees from charging exit fees, regardless of the account balance, which, of course, makes it so much easier for people to consolidate accounts.

Schedule 2 to the bill will address the provision of insurance through superannuation. The schedule requires that insurance be provided on an opt-in basis only for members with balances below $6,000, for accounts that have not received a contribution for 13 months or longer, and for any new members from 1 July 2019 who are under the age of 25. Again, when the Leader of the Opposition was responsible for superannuation, he presided over a change that saw young people defaulted into superannuation arrangements where they had to take out insurance, whether or not they wanted it or needed it. Under this bill, we are changing this.

Under schedule 3 to the bill, all inactive accounts with a balance below $6,000 and no insurance cover will be transferred to the Australian Taxation Office. The schedule also empowers the ATO, for the first time, to proactively return these amounts, along with existing unclaimed superannuation monies, to their rightful owners' active accounts. The ATO estimates that within a month of receiving the funds it will be able to reunify the amounts it holds with the rightful owners, which is a good outcome for those members. The amendments in the bill all apply from 1 July 2019. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.