Thursday, 28 November 2019
Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019; Second Reading
Before I was interrupted yesterday, I moved a second reading amendment. I understand that the member for Moreton is very, very keen to second that amendment but has not yet done so.
Our superannuation system is a significant national achievement. It sits alongside the Pharmaceutical Benefits Scheme, Medicare and the National Disability Insurance Scheme as something that has made our nation stronger and something that all Australians are very proud of. Fifteen million Australians hold superannuation accounts. Most of these funds are performing pretty well: 16 per cent per annum average return over the last 10 years. There are around $2.8 trillion in assets—that's more than 140 per cent of gross domestic product. Under current settings, that will grow to $9.5 trillion by 2035, expanding the pool of funds available for investment in local infrastructure and a stream of earnings from foreign investments. It's also strengthening our current account balance. Under current policy settings, the median balance on retirement for full-time workers will be $310,000 for women and something approaching $630,000 for men—a gap that we need policy settings to close.
Despite the low level of engagement, generally superannuation enjoys popular support. More than 91 per cent of Australians strongly support the superannuation system, a level of popularity that every member in this place could only hope for. That's a higher approval rating than the ABC's. The success and popularity of super does not mean it's perfect. We know there are issues that need to be dealt with, issues which demand the attention of government and industry. Unpaid superannuation totalling almost $6 billion per annum is one of those issues.
My deep concern, and the concern reflected in my second reading amendment, is that focus is being distracted away from these issues by the constant campaigning by members opposite to destroy our superannuation system, to undermine what we thought, going into the last election, was a bipartisan position that the legislated increases from 9.5 per cent to 12 per cent between 2021 and 2025 would persist. And yet we have a persistent noise, a persistent campaign being raised by in excess of 12 members opposite—we call them 'the dirty dozen'—who each takes home 15 per cent in superannuation, which is, for some reason, fair for them. It's very fair for members of this place to enjoy 15 per cent superannuation, but it's somehow unfair for the people who clean their offices, the people who work in this place, the people who struggle on part-time jobs to make ends meet to only receive 9½ per cent superannuation.
We call on the Prime Minister to bring these rebels into line. We call on him to bring these rebels into line, because nothing is undermining the success of superannuation more than the constant policy change and the constant noise coming from the members of the government who are saying: 'It does not matter that we went to the last election promising 12 per cent superannuation for Australian workers; that promise does not matter. We want to junk that in this term of office, and we want to ensure that everyone is frozen on nine per cent, so cutting their superannuation entitlements.' It's time for the Prime Minister to bring these rebels into line. I see the member for Hughes up there making a big noise. It's always the empty can that makes the most noise, and the member for Hughes makes a lot of noise indeed. He's at the frontline of the dirty dozen, saying, 'The people who clean my office are not entitled to the same levels of superannuation as I am.'
And he's right: it is their money, and he has no right to be campaigning to have their superannuation entitlements cut. We look forward to the battle. If they are saying to the Australian people, 'The promises that we took to the last election do not matter; we're going to turn them on their head and tear up the promise to stick by the legislated superannuation guarantee,' then we will join in battle with them, because a promise is a promise. You've torn it up, and we will ensure that that hangs around your head every day between now and the next election.
It's always a great privilege to follow the member for Whitlam, because every time he gets up and pontificates, with a hysterical and overacted performance of what he thinks he can prosecute in this parliament and the arguments he thinks are going to convince anybody, it is always the same argument, which is: the solution to the problem is more of him, not empowering millions of Australians.
This bill, the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, is actually relatively straightforward. It honours the commitment we have made to make sure that we assist in making sure that Australians get paid their superannuation. That's critically important. The superannuation guarantee provides that people are paid their superannuation on time; that it is paid for, consistent with the law; and that everybody gets the money that they deserve. This piece of legislation makes sure that, where there has been a failure to honour the law, there's an amnesty in place for businesses to do the right thing. The amnesty is critical because many businesses who may have unintentionally done the wrong thing want to be brought into compliance. They want to have a pathway to solve the problem. We want workers to be able to get their superannuation and for the legislative environment to accommodate that purpose, rather than going on grandstanding objectives and tilting at windmills, as the member for Whitlam just did in his speech.
Critically, this legislation also makes sure we improve the integrity of the superannuation guarantee system, including through the expansion of the existing Single Touch Payroll. It's to make sure there's a pathway where any employer honours their obligations to workers and pays their superannuation contribution. It ensures there's clarity in the system, that workers can take confidence around the security of their superannuation balances and that people are paying their superannuation on time. The government has done this not just by providing legislative pathways to do so, but also by resourcing the Australian tax office to make sure there's compliance. There was an extra $133.7 million in last financial year's budget, and that has enabled a huge number of audits and processes to take place. That sits against the backdrop of the protecting your superannuation act, which commenced on 1 July this year. That act provides for a pathway to get people's superannuation contributions rolled into single accounts and reunited where people have a number of accounts.
On many levels, this legislation is critically important but, frankly, very administrative. But that doesn't change its purpose and intent, which is honouring the obligation that this government has made to workers across the country. It sits against the backdrop of the inquiry that the Standing Committee on Economics is running at the moment, in the implementation of the Hayne royal commission's recommendations in making sure that all financial institutions, banks, insurance, life insurance advice as well as superannuation funds are honouring the law.
Superannuation, more than anything else, is a foundation of trust: workers receive money to put towards their retirement, and when that money is put in trust for them, invested for their future, they come to rely on it for their future security. It's pretty straightforward, and that's why the inquiry we're running is so critical. And, I can report back to the House, as part of that journey and that process, that we have uncovered worrying trends. We talked before about the protecting your superannuation reforms package, where the Australian Taxation Office is reuniting accounts for many workers who have duplicate accounts or where their super money is sitting in low-balance inactive accounts. At the last hearing we heard lots of concerning stories about millions of accounts being rolled from inactive low-balance accounts, where they're just eating into by fees, and instead being rolled into eligible rollover funds by industry superannuation so that they can be reactivated.
The member for Moreton has just proven my point. The point I was making was about how every single time we raise any misappropriation of the funds of Australian workers and their superannuation accounts the Labor Party runs interference. Every time we ask a question and every time we want accountability in the super system, they run interference for their mates in the sector. They won't stand up for workers. They won't stand up for savers. They just do what they do to shut down discussion and debate. That's exactly what we identified in the economics committee only the other day, where we found eligible rollover funds and the re-establishing of low-balance inactive accounts. As a consequence, there are industry super funds that can now mine them for more fees, more profits and more insurance payments that they would otherwise be ineligible for. What they should have been doing is rolling them into the Australian Taxation Office as part of the protecting your super arrangement. That's precisely why this type of legislative reform is critical. It may seem administrative, but it matters.
What is deeply, deeply disturbing is how much these members on the opposition benches simply get up and run this point of interference. They don't ask the tough questions in Economics Committee hearings. Let's face it, the member for—where's Andrew Leigh from?
No, not Whitlam. How ineffective he is!
An opposition member: You're doing well! Fenner!
The member for Fenner—that's his name!—the deputy chair. At our hearings with Westpac, only the other week, he didn't ask a single question about AUSTRAC when it was actually raised with us—I raised it as chair. But they had nothing to say and nothing to ask about it. The reality is that every time they have a chance to stand up for workers, stand up for savers or stand up for integrity in the financial services system they run interference, because they're not prepared to do the right thing.
I am pleased that the government is taking steps to address the huge issue that is unpaid super for many workers in Australia through this Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. Back in September 2017 I asked the then Minister for Revenue and Financial Services, through a question in writing, whether she had 'considered conducting a moratorium for employers with unpaid superannuation guarantee charge to provide them with the opportunity to come clean and make good'.
I have consistently and ardently sought to help employees who have been denied their rightful super payments, because it is unfair for workers and their financial futures and security, and it is unfair for competing businesses who do the right thing. And it's unfair for the taxpayer, who picks up the burden through higher spending on pensions if people don't get the super they deserve.
I have already referred to the private member's bill I introduced which sought to deal with these issues in detail, but we do need to do so much more. Any measure that provides a meaningful opportunity for employees to recover unpaid super is worthy of consideration. The bill and the moratorium it legislates to induce payment of unpaid super does provide a meaningful opportunity, but while this is a potential step in the right direction, it is a very small step. According to Treasury, only $230 million from the debt of approximately $6 billion in unpaid super is anticipated to be collected.
I also recognise the moral hazard involved in encouraging delinquent employers into believing that such moratoriums may become a regular feature in the future. For this reason, I believe that some surety in the legislation that another moratorium of this type will not occur within a reasonable time frame—say, for example, within the next 10 years—is needed. This would provide some reassurance to those concerned that the moratorium sends a signal with a perverse outcome. Indeed, it would clarify and mitigate against perverse outcomes, and I would encourage the government to consider an amendment in the Senate that may provide this kind of surety to overcome the problem of moral hazard.
I should also note that, while I support this legislation in this place, Centre Alliance will give the bill further consideration in the other place, and so we reserve our position. I would ask the government to properly fund the ATO, to ensure that enforcement activities occur. Approximately $2.8 billion gets added to the unpaid super debt every year. Quite frankly, if the ATO were a business with such mounting debt for super, carrying that debt year on year, well, they'd sack their debtors clerk—that is, if the doors to the business were not yet closed.
And it is so difficult for employees: they can't sue their employer or their previous employer. They just cross their fingers and hope the employer will do the right thing and that the ATO will take up the money owed to them. I have constituents who have long since retired and who are still waiting for payment from their previous employer. I had the ATO write a letter to one constituent. They sent him a notice that they had been able to obtain just one cent for him! Seriously! It costs more to put the stamp on the envelope than what the ATO were able to claim. The current pathway for pursuing unpaid super is incredibly poor and does not get the outcomes that we need. According to Cbus, without action, unpaid super and lost earnings will reach $66 billion by 2024. We just can't afford this as a nation.
In closing, I would encourage the government to better resource the unpaid super section of the ATO. If the government is not going to do that, we need to empower employees by listing superannuation under the National Employment Standards, in the Fair Work Act. This would at least provide the avenue for employees to pursue recidivist employers through the courts.
I rise to speak on the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. I think the issues that have been raised are important ones, as the member for Mayo just pointed out. The ATO has been undertaking vast amounts of resources to collect unpaid super. The Single Touch Payroll portal it's introduced will ensure that, moving forward, people who are not collecting superannuation on behalf of their employers will be identified much quicker. The figure that the member for Mayo talked about comes from industry super. Industry super has been unable to verify its figures, and it throws out these multibillion-dollar figures without any evidence for doing so.
When I sought an intervention yesterday on the member for Whitlam to ask him the source of his research and his numbers, he declined to provide that to us and instead asked me to make a contribution to this debate, which I did—
As I was saying, the member for Whitlam came in here yesterday and wouldn't take an intervention. The intervention was to answer the question of where he gets some of his figures from. Indeed, I wanted to know where his research is from that shows moratoriums don't work. What we've actually found out is, just one Google search away, there are 312 academic articles on the impact and effectiveness of moratoriums, everything from protecting rainforests in Indonesia to improving tax collection and, indeed, gun collection. Not all of those articles, because overnight I did have to sleep for a few minutes, but the vast majority of articles that I could acquaint myself with all point to one thing: that moratoriums work.
Given that we have a single-touch payroll being introduced, given that academic articles demonstrate that moratoriums work, given that, according to industry super, there are tens of billions of dollars' worth of superannuation ready to be collected and given that businesses, in anticipation—trusting the word of this parliament, trusting the word of those both on this side and those opposite that a moratorium would be announced—have come forward to actually review their accounts and to pay those moneys. It seems to us quite reasonable that this parliament would not only pass this bill but do it with absolute speed so that we could create certainty and start collecting the money that those opposite say they're so concerned about employees having.
Why is it that those opposite are opposed? Could it be that some of the people who are not in favour of this are some of their largest donors? I don't know. I'm not in the boardrooms. I don't get invited to those boardrooms the member for Whitlam gets invited to, so I would have no idea what goes on inside those hallowed wood-panelled walls with the deep blue carpet on the 60th floor of some CBD office building. Indeed, it's difficult to know whether some of these associations would even know what their members thought. Because as the member for Goldstein pointed out, and I can't believe he is not here to hear this speech, but that would be typical—we all have to listen to him! When he asked industry super representatives, as they propounded to us what their members are thinking, how they knew, their answer was: 'Well, we conduct advertising.' Yes, we understand that you tell them what they should be thinking. Then the member for Goldstein asked: 'But how do you know what they want?' And they said, 'Well, we advertise to them and then we do research to find out whether our advertising is having an impact on their views.' In other words, the very people who are informing the member for Whitlam how he should stand on this bill are the very same people whose idea of consultation is talking at people through television sets.
So I wonder, truly wonder, if we were really here in the interests of workers and employees who have not had their superannuation paid by employers—people who, through no fault of their own, have been unable to pay this or didn't realise that they were meant to have paid for these things—whether we would be voting against this or whether we'd be voting in support of it or whether we would be coming into the parliament and making the umpteenth joke about a World War II movie that hasn't screened since the 1960s? Because that's what goes for policy on that side of the House when it comes to these important issues.
If those opposite really care about workers and their entitlements, if you really care about reuniting them with the money that they're owed, if you really are genuinely concerned about getting the right outcome for everyone involved in this process, then you wouldn't move motions that the speaker no longer be heard, you wouldn't be playing parliamentary games and you wouldn't be making references to World War II movies and somehow alternating between 'dirty dozens' and 'unseemly dozens', and who knows what else. You wouldn't be trying to make a joke of this; you'd actually ask members what they really thought. You wouldn't say that consultations are just advertising to them and you would start to make a real effort to pass legislation like this that allows and enables employers to get on with the job of paying money back and that allows the ATO to get on with the job of prosecuting those who won't.
Firstly, I thank those members who have contributed to this debate. The government is acting to improve the integrity of the superannuation guarantee. With the introduction of near real-time reporting on superannuation guarantee obligations and payments, the ATO is able to detect and act on the nonpayment of workers entitlements much more effectively going forward. The SG Integrity Package also gave the ATO greater enforcement powers to collect SG charge liabilities from unscrupulous employers. But these measures do not address historical noncompliance.
To address this problem, this bill offers a once-off opportunity to employers to come forward, pay their workers what they are owed and wipe the slate clean. Employers have from 24 May 2018 until six months after this bill receives royal assent to voluntarily come forward and disclose their historical noncompliance without being subjected to penalties. This is the only chance employers will get to come forward and receive concessional penalty treatment. After the amnesty concludes, the ATO will take a dim view of those employers that could have come forward but failed to do so. Those employers will be subjected to penalties equal to at least 100 per cent of their noncompliance. I commend this bill to the House.
The original question was that this bill be now read a second time. To this the honourable member for Whitlam has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question before the House is that the amendment moved by the member for Whitlam be agreed to.
The question is that this bill be now read a second time.