Tuesday, 11 February 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; Second Reading
I'm pleased to be speaking on this bill and also on the second reading amendment that has been circulated. I formally move that amendment now:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House:
(1) notes that too many Australians retire without adequate retirement savings; and
(2) reaffirms its commitment to the legislated superannuation guarantee rise to 12 per cent by 2025".
Labor has a very proud track record when it comes to superannuation and we'll continue to fight for a stronger and fairer superannuation system. Because a few things have been said in this parliament today about the role of the Australian trade union movement in respect of superannuation, I want to take the opportunity to acknowledge the great contribution that the Australian union movement has made, together with the Australian Labor Party, in establishing our modern superannuation system.
Labor and the union movement won compulsory employer-paid superannuation through national worker-led campaigns, together with legislative action in this parliament to put together what today is a universal workplace right to occupational superannuation—a right that, in my lifetime, was once available only to politicians, public servants, senior managers and long-serving employees in certain industries, such as the banking and financial industries. Today, it is a universal right and one that is enjoyed by the people who attend us around this parliament, whether they're cleaning our offices or helping us here in the chamber, by the members of parliament, and by other parliamentary staff. It is a universal right.
Labor supports the objects of this bill which are to provide choice in superannuation, but we're committed to ensuring that every worker is in a high-performing fund and that adequate information is available to empower consumers with the information that they need to make choices that are in their own best interests. What is clear is that people do want to make the right choice and do want to have the right to choose their super fund, and the law should support that. But we also are very cognisant of the fact—a fact brought into stark relief by the Hayne royal commission into the financial services industry—that, often, a lot of evil can be done in the name of choice. We want to ensure that workers are not forced into funds either ill-informed of the consequence of those choices or because some other contrary or corollary arrangements have been made by an employer in a workplace with a proponent of that fund which is not in the worker's interests. People are already voting with their feet. In the last 12 months, $20 billion has moved into the not-for-profit sector, with consumers in search of lower fees and higher performance. Choice is already happening.
The Senate Economics Legislation Committee is currently inquiring into the provisions of this bill, and Labor reserves our position on the proposed choice of fund changes until after the Senate committee has reported. We are using the Senate inquiry process to ensure that there are no unforeseen consequences. A lot of evil has been done in the past in the name of choice. It's blatantly obvious that if a consumer, if a worker, is to have choice then that should go hand in hand with them having all of the information available to them. The choice has to be a genuine one. We want to ensure that consumers are empowered with the information they'll need to make choices in their best interest. I foreshadow that Labor will be moving amendments to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill in the Senate at the conclusion of the ongoing Senate inquiry.
This bill has a single schedule providing that employees under workplace determinations or enterprise bargaining agreements made on or after 1 July this year have the right to choose their superannuation fund. The amendments do not apply to workplace determinations or enterprise agreements made before that date. Enterprise agreements that were made before that date but which apply after that date will also not be affected by these amendments. The default arrangements that apply if any employee does not choose a fund are unchanged. This is a very important point, and I want to re-emphasise it. The bill does not prevent a workplace determination or an enterprise agreement collectively determining the default arrangements which will apply to employees at that workplace—a very important distinction.
Labor note that in the 2014 Financial System Inquiry there was a recommendation that all employees will be provided with the ability to choose the fund into which their superannuation guarantee contributions are made. That said, in a submission on the bill to the previous Senate inquiry, Industry Super Australia indicated that, of those employees covered by an enterprise agreement, only 7.4 per cent have no choice of superannuation fund, which represents something just short of two per cent of the workforce—about 1.9 per cent of the workforce. The industries which have the highest percentage of people who have no choice of fund are education, retail, construction, public administration, wholesaling, electricity and agriculture.
It is worth pointing out that in some but not all of those sectors the collective agreement or workplace determination has provided a superannuation contribution in excess of the current level of 9.5 per cent of employee earnings. I look at public administration as an example of that. In the Commonwealth Public Service and related entities, collective agreements provide arrangements for superannuation to be paid at the rate of 15.4 per cent of an employee's earnings. In the school education sector, in many states around the country, rates are paid in excess of the 9.5 per cent. In higher education, in the university sector, it is not uncommon for workers to receive 19 per cent of their earnings as superannuation through arrangements that have been negotiated collectively with their employers through their union representatives and enshrined in collective agreements. One can only assume that certain bargaining trade-offs have been made to achieve those excellent superannuation arrangements.
The second reading amendment before the House invites all members of this parliament to affirm their commitment to 12 per cent legislated superannuation guarantee amendments. We'll be putting the amendment. I hope it will be carried on the voices. I hope, when the amendment is put, that each and every one of those members opposite say, 'We support the legislated SGL increases moving from 9.5 per cent to 12 per cent of earnings.'
We move this amendment quite deliberately, because there's been a lot of noise and debate in the parliament, even in the previous debate. There's been a lot of noise and debate in the community. We've had the Prime Minister stand here and say he supports the legislated SGL increases on the very same day that members of his backbench have been out there running a campaign to have those increases cancelled, along with other radical changes to our superannuation system. So we're going to invite members opposite to vote on a resolution of the House, an amendment to the second reading amendment, which will affirm this parliament's support for 12 per cent superannuation. It's very important, because the community needs to know where everyone stands and where this parliament stands.
Today more than 15 million Australians have superannuation accounts with assets totalling nearly $3 trillion. That's about 140 per cent of GDP. This will grow to $9.5 trillion by 2035, expanding the pool of funds available for local investment and creating a stream of foreign earnings from overseas investments. Under current policy settings, the policy settings which I'm inviting all members of this House to affirm their commitment to today, the median balance on retirement for full-time workers will be around $310,819 for women and around $628,634 for men.
Deputy Speaker, you'll note there's a gap. The gap is intolerable. The gap requires a serious policy response. Labor went to the last election with some propositions about how to close the gap. To date, we've heard nothing from the government on this. I'd warrant that this is a far more serious issue than that being advocated by members of the government who are advocating a freeze or a reversal of the current superannuation guarantee provisions.
Despite the low level of engagement, superannuation is popular. There's not a member of this place that wouldn't be happy if they had a 91 per cent approval rating from all Australians. None of us can boast that we have that, not even the member for Grayndler, who's pretty popular at the moment. But 91 per cent of Australians support superannuation despite the low level engagement. That's a higher rating even than the ABC, and that's probably, along with Medicare, two of our most popular national institutions.
Australians now have access to retirement savings accounts that have on average returned somewhere between 6.1 per cent and 8 per cent per annum over the last 10 years. That is a rate of return that I warrant nobody would be able to achieve through a passive investment, such as those that are available as alternatives to superannuation, and certainly not with the security and certainty that superannuation has provided.
The result of Labor's reform is that ordinary workers near retirement today have options that they simply never would have had. And if the Liberals had maintained their comfy, sleepy, pre-Keating, corporate dystopia, those retirement savings would not be there, except for the very, very wealthy or in those occupations I described earlier.
Sadly, the Liberals, the coalition, the government, aren't tackling the issues that really do need to be tackled. They aren't tackling underperformance within some of the sectors of the industry. If that was dealt with in a thorough and ongoing way it would ensure that some workers who were operating in underperforming funds could literally double their retirement savings on current settings, just by lifting the performance of their fund up to the performance of the mean or even the higher-performing funds.
They aren't tackling the issue of excessive fees, which affect about 15 per cent of APRA-regulated member accounts. They aren't tackling adequacy. In fact, many of the coalition backbench want to take the issue of adequacy backwards. They have already said that they want to ensure that the people who clean their offices don't get anywhere near the same superannuation that they enjoy, and that just strikes me as simply unfair. They've got a job ahead of them, I've got to say. How they can go and argue to people in the community that it is fair for them to receive 15 per cent superannuation but the cleaners, the people who make their coffee, the people who look after their kids in childcare centres and the teachers at their kids' schools are only entitled to 9.5 per cent or less.
I encourage any of them to go out there and make that argument: 'It's fair for me to get 15 per cent, but you—know your place; you're entitled to just 9.5 per cent.' That's literally what is being argued by many of the rebels on the government's own backbench. We'll enjoy that debate. They certainly aren't interested in tackling the issue of superannuation theft. In fact, they're bending over backwards to make things easier for employers who have stolen superannuation funds out of their employees' pockets. Don't get us wrong. We're willing to tackle the issues that are currently before the parliament in this bill. But there's a much bigger agenda that needs to be dealt with, and the government simply isn't focusing on it.
A few moments ago the member for Goldstein stood in this place and made all sorts of wild, frothy allegations about participants in the superannuation system. In his peripatetic fashion, he made all sorts of allegations about the motivations of people within the superannuation sector and the opinions held by members on this side of the House and others. I just want to set the record straight on a few things, and it goes to all of these proxy arguments that are being run about why we shouldn't stick with the commitment the government made going into the last election that they'd leave superannuation alone. It is a known fact that wages have been flagging under this government's watch—a known fact, and they have no plan to deal with it. This is a matter of concern to everyone, from the Reserve Bank board to the Reserve Bank governor to senior Treasury officials to even the Business Council of Australia to welfare agencies—in fact, anybody who understands that if people don't have money in their pocket then they're not spending it in shops, they're not spending it on services and they're not spending it in the broader economy. Unless we get wages moving, we simply are not going to do anything about boosting the level of demand in the economy.
After five years of sitting on top of a flagging economy and wage increase levels that are in the doldrums, these guys have finally lighted upon an idea that the way a worker can get a wage increase is to pay for their own wage increase. It's extraordinary, isn't it? You can imagine how members of this place would react if a proposition was put to them that for the next five years the only way they would get a wage increase would be if their superannuation was cut. I can just imagine the conversations they'd be having in the halls around this joint, if that proposition was put. But somehow the member for Goldstein over there, the member for Mackellar and others of their ilk—some of the rebels upstairs in the other place—think that is a reasonable proposition.
They are quite literally saying to Australians: 'We have not got a clue when it comes to how we increase wages in this country, but the only proposition we're going to put on the table is that we cut your superannuation payments'—not in the guarantee that it's going to flow through to wages but on a wing, a prayer and a wet finger in the air. I could not walk into a workplace in Australia—and I've walked into many workplaces in Australia and have had to put tough arguments to people around wages negotiations—and say: 'We're going to cut your superannuation payments as a way of funding your next pay rise. Nothing else is on the table. And, by the way, your penalty rates have been cut as well.' No worker is going to see that as a good deal. They're going to see it coming. They'll say, 'Why is it good enough for the government to keep their benefits but we've got to cut ours to get a pay rise?' I'd like to see the government make that argument, but that's—quite literally—what they're standing here in the parliament today making out.
In a few moments, when we vote on the second reading amendment, members of the coalition parties will have their opportunity to affirm their commitment to this proposition and reject the proposition that the workers of Australia, somehow, are not as good as them and not as entitled as they are when it comes to superannuation payments. There is a cost to what the government is proposing. It means a person on average earnings will lose somewhere between $60,000 and $80,000 on their retirement savings on what the government has already done. I'm talking about their existing freezes to the superannuation guarantee levy. Those losses will be compounded if these nutters on the other side get their way. We will resist it. We are giving all right-thinking members in this place the opportunity to reaffirm their commitment.
I want to say one final thing on the issue of the link between wages and superannuation. I want to clear a few things up. Labor has never argued that there's not a link. It just beggars belief that when the first accord was made there was a wages superannuation trade-off. In my contributions today I have spoken about unions, which, on behalf of their members, have negotiated wage increases and superannuation increases above the superannuation guarantee level. It beggars belief, if you're sitting around a negotiation table and arguing for both wage increases and superannuation increases, that they're not linked. Of course they are. They're linked in exactly the same way that total wage costs are linked, whether it's payroll tax or any of the other costs that are imposed upon employers and businesses in respect of their workers.
What we simply don't accept and what we simply can't accept is that the only way a worker today is going to get a wage increase under this government—that hasn't got a clue when it comes to economic policy—is if we cancel superannuation increases. We reject that. We also reject the argument that, if you cancel modest superannuation increases, somehow businesses around the country are going to say: 'You know what? I'm going to give all of my workers a wage rise.' It's just simply nuts, and it's not going to happen. But that's what some of these clowns are trying to get us to believe. Let me spell out what these modest superannuation increases are: in June next year, 0.5 per cent; in July next year, 0.5 per cent; in July the year after, 0.5 per cent; and 0.5 per cent for each and every year until 2025. That's five instalments of a very modest 0.5 per cent spread over five years.
We don't argue that there's not a link between wages, superannuation and total employment costs. Of course there is. It beggars belief to argue otherwise. It's not one for one. In some industries, as a result of the bargaining power of workers either collectively or individually, in some labour markets where workers are in hot demand and attractive employment packages need to be offered, in some demographics—senior management are very good at this. Senior management within corporate Australia are very good at ensuring they've got all of these bases covered. Often, the contributions into their superannuation far outweigh their contributions into their fixed wages. So we don't argue there's no link. That beggars belief. What we do argue is that it is a hopeless government, divided and without a clue. It's clueless when it comes to stimulating wage growth in this country and it's clueless when it comes to economic policy in this country. What we do argue is that such a government does not have a right to go raiding workers' superannuation to make up for the fact that it is absolutely clueless when it comes to how to give workers a pay rise in this country.
We are inviting all right-thinking members of this place to come into this House this afternoon, reject the calumny of the other side and vote in favour of the policy that they took to the last election—the policy that the Prime Minister says he supports and that the Treasurer says he supports. Here's their opportunity to come into the House today and affirm that very thing.
As I was saying earlier to the member for Whitlam, I had to say some nice things about him earlier; I might have to retract some of those. It's interesting, once again, to listen to his contribution. He seems to forget that his side of politics—those opposite—went to the last election with a proposal for $387 billion of new taxes across the Australian economy. That is a very convenient oversight by the member for Whitlam, and it behoves us to continue to remind the Australian people, each and every day, that those opposite proposed to hit our economy with the sledgehammer of $387 billion of new taxes. Towards the end of his contribution, he did properly recognise that the policy that we took to the election around superannuation hasn't changed. It is what it is.
The bill before us today, the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, is about ensuring that Australians have choice with regard to their superannuation. The bill amends the Superannuation Guarantee (Administration) Act to give Australians employed under industry awards or enterprise bargaining agreements the choice, from 1 July 2020, to nominate their own superannuation fund. As I discussed in my earlier contribution on the previous bill to do with super, this is about ensuring that we minimise the risk of Australians having multiple superannuation accounts. Given the importance of compulsory superannuation contributions to Australians' retirement incomes, they—and only they—should be able to decide where their money is invested. Yet there are still around 20 per cent of workers who can't make that simple choice because their 9½ per cent super guarantee must be paid to a fund listed in their award agreement under some industrial laws.
I remember hearing, when we had this debate a couple of years ago, the story of a gentleman from, I think, Perth who actually went to court to try and have his super put into a different super fund from what was mandated in the award, and he was unable to do so. So this legislation is very timely and very appropriate. It is about the capacity of Australian people to maximise their superannuation savings and ensure they're not diminished. Very often this occurs for young people who might have a variety of different jobs, those on lower incomes who have small amounts going into super under our current superannuation system or those who have changed jobs over the course of the years and might have a variety of funds. Prior to being in this place when I had a financial services business, I remember at one stage having a potential client come to me who had eight different super funds. It took us nine months to work through those various super funds to get them amalgamated into a single fund so that they could then fully see what they had in their super.
That is why we need this bill and the previous one that we spoke about today: to give all Australians the ability to choose their fund, to protect young and casual workers employed under specific agreements from being pushed into having multiple, often underperforming, funds because of outdated laws. This bill is for the retail employees working at our local Coles stores, like the ones at Ormeau and Park Ridge; the truckies transporting stock to our local businesses; the nurses and midwives working at Logan Hospital; teachers at Windaroo State School or Boronia Heights State School; and the two million Australians employed under enterprise agreements. Currently employees in the aforementioned and other sectors have their superannuation guarantee paid into employer nominated funds instead of funds of their own choosing. These workers are denied the choice to pick the superannuation fund into which they want their hard earned funds paid. This puts them out of step with the majority of workers and prevents them from having the control over their retirement savings that they desire and need. The lack of choice and control over superannuation means that these Australians are paying unnecessary fees and insurance premiums and, as I touched on before, run the risk of accumulating multiple superannuation accounts, all of which have the potential to erode their hard earned retirement savings. Importantly, one of the issues—and I have seen this firsthand—is that they actually lose interest in their various superannuation accounts. This is one of the problems that I've seen professionally prior to working in this place. People don't pay attention to the multitude of superannuation funds, and that adds to the risk of the money that has been invested on their behalf being eroded and frittered away. The Murray review found that lack of choice is a barrier to Australians engaging with their superannuation and this barrier should be removed. That is what this legislation is about.
On this side of the House we advocate for and support choice and freedom for all Australians. It is a fundamental principle which coalition governments believe in. We believe that denying Australians a choice over their super is fundamentally unfair, anticompetitive and inefficient. Under this proposed legislation employers would no longer be able to deny their employees the choice of superannuation on the grounds that they are employed under an enterprise agreement or workplace determination that, importantly, still specifies a default fund. New employees to whom such a determination or agreement applies will have to be provided with a standard choice form and given the opportunity to nominate their own superannuation fund.
On this side of the House we know that Australians work hard to build their nest egg for their later years. We believe they should be given the opportunity to maximise the value of those retirement savings that they accumulate. After all, it is their money, not the employer's money and not the superannuation fund's money. Giving them the choice over their super fund will hopefully help reduce the perennial problem of people racking up multiple accounts, paying multiple fees and insurance premiums.
Under this bill an employer will need to ensure that that choice option is provided. If the employer makes non-compliant contributions in relation to superannuation funds, they will have increased their superannuation guarantee shortfall over the quarter. This provision increases employers' liability to superannuation guarantee charges, which are paid to the Commissioner of Taxation in respect of each employee. These notional contributions for an employee are in relation to defined benefit schemes and will not cause the employer to have an increase in a guarantee shortfall if the employee's benefit in the scheme would not be affected by the employer making contributions to another fund. To be clear, the bill does not prevent enterprise agreements specifying a particular fund; it just provides additional choice.
Since the last time this bill was considered, we've seen the evidence from the Productivity Commission's report about the negative effects of multiple accounts on retirement savings, estimated at $2.6 billion a year in unnecessary fees and insurance premiums. The Commission also found that legislative change was needed to remove the restrictions on Australians being able to choose their own fund.
The government has already taken action through the Protecting Your Superannuation package. This was introduced last year to cap fees on low-balance accounts, remove the existing stock of multiple accounts and consolidate low-balance accounts into active funds. As we saw earlier today with the previous piece of legislation, closing down eligible rollover funds and moving those to the ATO is now a further step in consolidating lost superannuation. This bill is another step in fixing the problem of multiple accounts by seeking to prevent Australians from being forced into default funds that are specified under enterprise agreements or workplace determinations.
Most of all, we want the settings that underpin our superannuation system to be focused exclusively on the interests of members of these funds and on giving them the framework to maximise their retirement savings from the first contribution and throughout their working life. I commend this bill in its original form to the House.
Labor is referring the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 to a Senate inquiry for good reason. There are still question marks about whether or not Australian workers will actually be disadvantaged through this legislation, which seeks to require that employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. There's a risk that vulnerable employees may be forced into funds that are underperforming and may actually end up worse off. So Labor's referring this bill to a Senate inquiry.
Nonetheless, I do wish to make some remarks regarding the bill, and, importantly, the second reading amendment that's been moved by the shadow minister, the member for Whitlam. The amendment points out this government's atrocious track record when it comes to supporting superannuation in Australia and the fact that many Australians will retire with inadequate superannuation balances. The government is seeking to undermine boosting those superannuation balances by questioning whether or not the staged increases in compulsory superannuation should go ahead. That's been the view of some MPs, and you might call them rebel MPs—certainly a sizeable number of backbench MPs on the coalition side.
This bill amends the Superannuation Guarantee (Administration) Act to require that employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. It would apply to new workplace determinations and enterprise agreements made on or after 1 July 2020. Some employees are covered by enterprise agreements or workplace determinations that do not allow choice of which super fund their compulsory superannuation guarantee contributions are paid into. In terms of the number of people, Industry Super Australia estimates that, of those employees covered by enterprise agreements, only 7.4 per cent have no choice of superannuation fund, which represents just about 1.9 per cent of the workforce.
When it comes to superannuation, Labor has a very strong and a very proud track record not only of fighting for a better superannuation system but also of introducing necessary reforms to strengthen the superannuation system and ultimately ensure that people who are members of superannuation funds—particularly low-paid and vulnerable workers—are in the best fund possible and get the best deal that maximises their retirement incomes into the future.
While the Senate Economics Legislation Committee is currently inquiring into this bill and Labor has reserved its position on the proposed choice of fund changes until the committee has reported, we do, of course, support choice in superannuation. Not being able to choose a person's own fund can mean that employees who've changed workplaces can end up with several superannuation accounts, leading to higher fees and charges and potentially paying multiple insurance premiums.
Labor is committed to ensuring that every worker is in a high-performing fund and that adequate information is available to empower consumers with the information that they need to make choices that are in their best interests. Getting stuck in an underperforming superannuation fund remains a real risk for many Australians. It's a risk not only to their wellbeing and their retirement but also to the wellbeing of their families and their next of kin. An underperforming fund can cost an Australian worker the equivalent of 13 years of lost wages, and regulators and consumers need to be able to identify those funds that are charging too much and delivering too little.
Millions of Australians are being ripped off by underperforming accounts, and it's critical that these funds are forced to report their performance and lift their game. We've seen recently the MySuper heat maps that have been released by the Australian Prudential Regulation Authority, which is a good start. It puts the performance of the $2.9 trillion superannuation industry in Australia and their funds under the microscope and allows consumers to access, in a timely manner, information that's easy to understand and to make their own decisions about the performance and comparison of funds that they're looking to enrol in. The release of the APRA heat maps is an important step towards providing Australians with the information they need to get out of underperforming superannuation funds and into better-performing funds.
But there is more to be done, including the extension of heat maps to the choice sector and ensuring that the data is presented in a way that's more easily understood by consumers. It's time those opposite stopped some of their ideological attacks on the super system and got on with the difficult work of fixing some of that underperformance. We all know that the government doesn't have the best track record when it comes to delivering on some of those changes to superannuation around performance. We remember its disastrous 2016 superannuation tax 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 those sensible reforms to tax concessions that had been put up by the Labor Party, particularly those for people on higher incomes.
Then, in its 2016-17 budget, the government announced that it planned to make changes to some of those tax concessions for high-end super. But it was the way it went about it. It was done in a hurry, without consultation with the industry and, you might say, without due diligence, and the government's proposed $500,000 lifetime cap on non-concessional contributions triggered widespread concern that the government was making retrospective changes. The government didn't respect those calls and arrogantly ploughed on, and we saw several members of the coalition raise concerns about that notion of retrospectivity, which saw the member for Dawson threatening to cross the floor and oppose the government's budget proposals if changes were not delivered.
As with a lot of reforms that were put forward by this government in respect of superannuation, they reluctantly scrapped the changes. And that was only after it had undermined confidence in the retirement system and sparked a civil war inside the Liberal Party. Fast-forward to 2020, and now this fighting is continuing within the coalition around the notion of the level of compulsory superannuation contributions.
Mr Tim Wilson interjecting—
And one of those who have been involved, as the rebel MP, is the one across the chamber there who's rudely, once again, interjecting. We all know that the member has been out there trying to undermine government policy, trying to claim that people who are on low incomes will lose out if Labor's legislated increases in the compulsory superannuation guarantee are increased into the future. All it's going to mean—if the government listened to the likes of Mr Wilson—is that low-paid workers, particularly women—
I won't refer to you anymore. There you go!
If those rebel MPs get their way, what it will mean is that vulnerable Australian workers are going to end up with less in their superannuation retirement savings at the end of the day and will potentially have to rely on the age pension to fund a comfortable retirement. That will increasingly put pressure on the Australian budget as our population ages. And it's more than a few rogue players on the backbench; it's a reflection of the ideology that many in the coalition have around the notion of universal superannuation in this country.
The retirement income review shouldn't be a stalking horse for further delays to the legislated increase in the SGC to 12 per cent. Too many Australians retire without adequate retirement savings, which is why our super system needs to be strengthened and protected, not undermined. Labor created a world-class system so that every Australian could have some dignity in retirement. We will always fight to protect that system, including against the remarks by members opposite that are seeking to undermine that compulsory increase from nine to 12 per cent into the future.
Once again, Labor issues caution with respect to the passage of this bill. That's why we have referred it to a Senate inquiry to look at whether or not Australian workers are actually going to end up worse off if they are forced into underperforming funds. That's something that we need to be satisfied with before we offer wholehearted support for this bill.
In speaking to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 I'd like to pick up where I finished on my earlier remarks on the previous piece of legislation, because what we just heard from the member from Kingsford Smith was, once again, a diatribe of allegations and a diatribe of justification about why industry super funds, in particular, should be able to squander and take possession and control of Australians' retirement savings.
Opposition members interjecting—
I note that some of the members opposite chose to interject. In fact, one of them got outraged because I dared point out a point of order; one that they regularly make themselves, which shows the hypocrisy that's at the heart of the Australian Labor Party and their agenda, because they have no—nil, zero—concern for Australians and Australian workers. I make the remark because we often observe in this place that it's a choice for the Labor Party about what they stand up for. If you were here in the chamber in the last parliament, you would have seen the then Leader of the Opposition stand at the dispatch box, right opposite where I am standing now, and sell out Australian workers. Worse than that, he justified it every step of the way. If you work in retail, that's fine; your income and your benefits are there to be sold and traded away for the interests of power accumulation within the Australian Labor Party. That is the foundation of the Australian Labor Party. It is one giant corrupt patronage network.
For the sake or the benefit of the member, I will withdraw, but I was reflecting on the sentiments of the Australian Labor Party, not on an individual member. I think I have every right to reflect on the sentiment of the Australian Labor Party and their motivating force. When it comes down to it, the Australian Labor Party have a long-term history of selling out Australian workers and selling out their retirement security. That the former member who stood at the dispatch box just then went around the country claiming to people everywhere that there was a justification for their giant $387 billion worth of taxes and a justification for the savings of a million retirees being hit is despicable. It's a despicable act.
I was the chair of the economics committee leading the inquiry that actually raised these issues—which those opposite did not want to hear. Those on the opposition benches kept saying that the only people who were going to be hit were those well off. But families, elderly people and people with a disability came before the committee and told their stories about how Labor would destroy their lives. Their response was to scoff with disinterest and to call it out as a lie. Some of us will never sit by and watch the conduct that they engaged in. For the member for Kingsford-Smith to stand up, to go to that dispatch box and to dismiss it, all when he was the front face, and to actually rationalise it to the Australian people, it was a despicable act then and it's a despicable act now.
This legislation is designed to stop Australian workers being ripped off. Now you'd think the members of the opposition would support it. If they had any integrity or if they had any credibility, they'd support it unamended. But, like every other piece of legislation, we go through the journey of them using it for a political windfall or benefit in the hope that they can claim relevance or obstruct or put hurdles up to its implementation.
The purpose of members on this side is to stand up for Australians. We're the only side of politics today that backs people who stand on their own two feet. We want people to work. We want people to be able to be successful. We want people to be able to provide the nucleus of a family and a community and a home as the foundations for a great country. That's what we stand for. What we despise is the hypocrisy of those who claim that mantle for themselves but only to enrich their own powerbase. I know members don't like for it to be told and to have it exposed, but it's the truth. Look at how fast they will race to defend the collective interests and corporate interests of industry super funds in the way they won't do for workers when they sell out their interest for industrial awards or to oblige people and remove their choice, their freedom and their opportunity by compelling it to go into the control of the people who put them in this place.
The modern Labor Party is not a labour party that reflects the interests of workers. The modern Labor Party is founded today to protect the interests of the accumulation of capital, capital that gives them control, particularly over industry superannuation funds. They scoff because they know that when it's exposed it becomes nakedly obvious to the Australian people that their motivation is not pure. It is not somehow to advance the collective interests. It is a great reminder of the chapter in The Road to Serfdom by Friedrich Hayek: it is a reflection of why the worst people get to the top. This is the spirit that sits behind their constant opposition for sensible, pragmatic reform so that money that Australians earn, that they put in their superannuation accounts, sits in their hip pocket at retirement and isn't raided by fees and by unnecessary insurance and isn't sold out to their industrial arrangements to advance the interests of the modern Australian Labor Party. That's why we stand up in this chamber for this legislation. That's why we stand up: because it reflects the type of country that we want to be—one where we encourage people to stand on their own two feet to save and sacrifice for their own retirement security so that they can take care of themselves. I can't think of a better emblem and ideal of the foundation of a country and a successful country than that. When you can't take care of yourself, then you ultimately fall on to the shoulders of others and deny the opportunity that you can turn around to others and help them too. That's the foundation of what we believe on this side of this chamber. You know it and I know it. The problem is the sentiment is not shared on the other side of this chamber. And of course we've also had the shadow minister and the member for Kingsford-Smith go to the dispatch box in this debate and lecture people on this side of the chamber with straw man arguments about the costs of the policies that they rapaciously advance, because, in the end, they don't care about workers' interests. They don't care about workers' savings. In fact, the very policies that they will go and die in a ditch for, which accumulate the wealth and control in the hands of their friends—the RBA, the Treasury, the Grattan Institute and so many other groups—lower the incomes of Australians today. They scoff at that proposition, because of the economic illiteracy and disinterest of the workers who they claim to represent.
Well, the member for Morton claims that disinterest means impartial. I would accept that as the basis of the greatest contribution that many members opposite have ever shown towards the Australian worker. But it's not just impartiality and it's not just disinterest; at times it's hostility to their interests because it undermines their own. That's why we stand tall and proud for this legislation. This is why we stand for closing loopholes that will actually advance the interests of Australian retirees. That's why we stand in this place against their retiree tax, which they wanted to use as a vehicle to undermine the retirement security of a million Australians. That's why we stand tall and proud for making sure that people are in the best position to save and sacrifice for themselves, because they, every Australian, can be part of the great foundations of this country. The only thing the modern Australian Labor Party does is look to workers and say that they want them to be the greatest foundation for themselves. Thank you.
In Dante Alighieri's inferno he ranks the inner circles of hell. He puts the murderers and all sorts of horrible people in the outer layers, moving all the way in. The second last circle of hell he reserves for hypocrites. Some days I really understand why he went with that literary device.
I rise to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. This bill amends the Superannuation Guarantee (Administration) Act 1992 to require that employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. This would apply to new workplace determinations and enterprise agreements made on or after July 1 2020.
Choice in where your superannuation contributions go is a good thing. Rather than just bombast, Labor actually are the party of universal superannuation and Labor supports fair dinkum choice in superannuation. Labor is also committed to making sure that the superannuation of every worker is in a high-performing fund and that every consumer has the information they need to make the best choice of fund. Labor is rightly proud of Australia's superannuation system. It's one of our most significant financial and social reforms. The Keating government's brave reforms in 1992 introducing the compulsory employer contribution scheme will continue to have life-changing impacts on Australians forevermore as they age and enter retirement.
Sadly, Australia's population is ageing. Despite the optimistic recommendations of Treasury there's actually no denying that. It's an empirical fact that every demographer will confirm. In 2017 there were 3,794,062 Australians aged over 65 and they accounted for 15 per cent of the population. If we fast forward or project forward it's estimated that by 2057 there will be 8,799,475 Australians aged over 65 and they will account for 22 per cent of the population. But it is because of the foresight of the Labor Keating government that many of these Australians will have a comfortable retirement funded through their own superannuation funds.
Older Australians deserve a dignified and comfortable retirement, so Labor will always support sensible reform to Australia's superannuation system. Australia's superannuation system currently has over 15 million members and over 80 per cent of Australians aged 25 to 54 hold a superannuation account. There are around 28 million superannuation accounts. When we break down the funds there are 217 institutional funds, which breaks down into 38 industry funds, which tend to be high-performing; 37 public sector funds; 24 corporate funds; and 118 retail funds. There are also 517,000 self-managed funds, with $697 billion in assets. The Australian superannuation system currently manages over $2.8 trillion in assets, more than 140 per cent of our GDP. What a proud legacy of the Hawke and Keating Labor governments. I should mention the Rudd and Gillard governments, which made some improvements there, as well. It is estimated that by 2035 the superannuation system will be worth $9.5 trillion—a small country, but an incredible amount of funds being managed by Australians, and managed well by Australians. That's an enormous asset, held by working Australians.
The provisions of this bill will give every worker under a workplace determination or enterprise agreement the right to choose their superannuation fund. In effect, this bill gives those workers the power to choose where they invest those funds—$2.8 trillion worth of power, and rising; the power to choose a fund that will give you the best return on your money so that your retirement is the best it can be; and the power to choose a fund that will invest your money how and where you want it invested. You can have total control, or limited control. You can make the decisions. That's why it's so important that Australians have choice in where they put their superannuation funds. The power of your superannuation funds means you can effectively shape the world you live in. For instance, you can choose to invest in what is called an 'ethical super fund', which only invests in clean energy or sustainable products, medical solutions, innovative technologies, responsible banking, health care, recycling, energy efficiency, education and aged care. Take the time to look at what your funds are doing. Who wouldn't want to invest in those things, especially when the returns are healthy? Imagine if our $2.8 trillion, and rising, funds were put into those investments right now. It is a power that Australians hold to change our world right now, a power that millions of Australians hold in their hands—just an ethical phone call away, or an ethical mouse click away.
Under current settings the median balance on retirement for full-time workers will be $310,000 for women and $628,634 for men. For median workers their average annual retirement income will be around $28,000 for women and nudging $34,000 for men. For those women, that's only 65 per cent of the ASFA comfortable retirement income standard and for men it is 79 per cent of the comfortable retirement income standard. It's even worse for workers who fall in the bottom 10 per cent of the income distribution. Women in that category will be only 21 per cent better off than they would be if they were receiving the age pension and men in that category will be 37 per cent better off, compared to the age pension. I'll come back to that gender gap in a minute. So, although our superannuation system is working for many Australians, sadly it is also leaving some of our fellow citizens behind. The superannuation guarantee is currently legislated to increase to 12 per cent by 2025, although I would go on the record and say I'm a little wary of the machinations of some of those opposite. But, I live in hope. For average workers the balance on retirement for median workers will rise by 20 per cent for men and 19 per cent for women. The poorest workers, those in the bottom 10 per cent of income distribution, will retire with an additional 30 per cent in accumulated superannuation. For those workers, this will make a substantial difference to their comfort in their later years—to their health, to their retirement and to their quality of life.
The success of Australia's superannuation system relies on employers paying the superannuation of their employees. That's the contract—that's the deal. But, sadly, underpayment of superannuation by employers is a significant issue in Australia. Industry Super Australia estimates that 2.85 million Australians were underpaid. That underpayment amounted to $5.9 billion of their super entitlements. This is a very significant problem. These are scary numbers—$5.9 billion—and, sadly, it is increasing. Superannuation theft has increased by 25 per cent over the three years from 2013-14 to 2016-17—under the coalition's watch, I stress. Australian workers need a tough cop on the beat, and what do we get? One who is asleep behind the wheel with their feet up and half a doughnut hanging out of their mouth.
As I mentioned previously, the amount of superannuation accumulated by women is less than that accumulated by men. The average balance for men is 63 per cent higher than that for women, and it's worse for older Australians nearing retirement, where the average balance for men is 72 per cent higher than for women. Of those people nearing retirement without any superannuation, 13 per cent of men and 23 per cent of women are in the 60 to 64 age group.
Our superannuation system is currently not working as well as it needs to for women. I hope that the coalition government have a plan to address this issue. But, in their seventh year, we're yet to see it, and I fear that they do not have a plan. Too many Australian women are retiring into poverty. Older women, particularly single women, are at a greater risk of experiencing poverty and homelessness in retirement. By the time they're 60, 34 per cent of single women in Australia live in poverty. Labor took to the election a plan to boost women's superannuation balances by paying the superannuation guarantee on paid parental leave and making it easier for employers to pay extra superannuation to women. Labor would be happy for the coalition government to adopt these policies. They're good, sensible policies.
More generally, while the superannuation system delivers strong returns for many Australians, some are trapped in persistently underperforming superannuation funds. At least $269 billion in assets and five million members are stuck in underperforming funds—not industry funds, I would stress. Superannuation fees are higher in Australia than in other OECD nations. Australians pay more than $30 billion a year in superannuation administration fees—1.1 per cent of total assets. That's why we've been happy to send this bill off to the well-respected Senate economics committee. We hope that this piece of coalition legislation doesn't make Australian workers who pay superannuation worse off.
I rise to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. As my friend the member for Whitlam and shadow minister for financial services has indicated, Labor has agreed to support the bill in this House but to reserve our final position until after this issue is fully examined in the Senate. I support the amendment moved by the member for Whitlam.
This bill has a single schedule, providing that employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. The bill amends the Superannuation Guarantee (Administration) Act 1992 to ensure employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. This applies only to new workplace determinations and enterprise agreements made on or after 1 July 2020. Of course, over time all agreements would be covered by this new requirement as those agreements and determinations are renewed. The default arrangements which apply if an employee does not choose a fund remain unchanged.
Some employees are covered by enterprise agreements or workplace determinations that do not allow choice of which super fund their compulsory super contributions are paid into. In a submission to the previous Senate inquiry on the bill, Industry Super Australia indicated that, of those employees covered by enterprise agreements, only 7.4 per cent have no choice of superannuation fund, which represents just 1.9 per cent of the workforce. Labor is not against choice. For example, we appreciate that employees changing jobs may want to retain their current superannuation arrangements rather than have to start afresh in a super fund mandated by an enterprise agreement. That can lead to workers having multiple accounts and paying multiple lots of fees and insurance premiums.
However, choice can be a vexed issue and has varying results in different circumstances. For example, in the absence of the legislated but not enacted super choice product dashboards, many consumers may not have the information available to them to make informed choices that are in their best interests. I note that Industry Super Australia has highlighted that choice is attractive but has the potential for greater consumer harm if it is not accompanied by strong consumer protections and enforcement. Their support for this bill is conditional on the implementation of the legislated choice product dashboard.
I have to say that choice can be exercised in several ways. It isn't just about individuals making a choice. Choice can also be exercised where workers collectively vote to endorse or mandate a particular fund for a workplace or company in an enterprise agreement. Why is it that collective choice is not as valid as an individual choice? Collective choice is also a particularly valid form of choice in industries like transport and construction, where workers frequently move between employers or across locations. Having a commonality of fund can assist those workers as well as employers by easing administrative burdens and ensuring better compliance.
In the university sector, there is another complexity. University staff can choose their current scheme or elect to join UniSuper as the fund mandated in the National Tertiary Education Union's enterprise agreements. Some 400,000 university staff have chosen UniSuper. Members can then, within UniSuper, choose either a defined benefit or an accumulation option. The defined benefit scheme, which is the choice of 80 per cent of employees, needs certainty about the number of staff that will take up that option in order to survive. It is not guaranteed by employers or the government. It is a scheme that allows academics and other staff to move seamlessly between universities across Australia and remain in one scheme. The defined benefit scheme would be jeopardised if this legislation passes.
There is another issue. Many organisations say that any enterprise agreements that pay above the SGC should be exempted from this legislation. For example, the universities pay 17.5 per cent. The mandated funds which are mandated in enterprise agreements are almost always industry superannuation funds. While industry funds have varied performance levels—and these go up and down—one thing you can be sure of is that industry funds are well managed and well governed. They are subject to enormous levels of compliance. Within most industry funds, there are a range of investment options, including direct ownership of shares to suit the risk appetite of each member. So there is enormous choice within each fund already. Now is not the time for a chapter and verse comparison of the returns of industry funds versus retail funds. However, I would refer to the minister's statement in the second reading speech in which he said:
And most of all, we want the settings that underpin the system to be focused exclusively on the interests of members—on maximising their retirement savings from the first contribution and throughout their working life.
However, in reality, this choice legislation doesn't actually realise that admirable ambition. The McKell Institute, said in its submission to the inquiry of the Senate Economics Legislation Committee that after examining the breadth of mandated funds:
Overall, we found the fewer the restrictions or limitations placed on individual choice, either by employees or by employers, the worse the overall performance outcomes were for employees. Of the six main cohorts identified, employees under agreements with 'collective choice' or 'group choice' were the most likely to be placed in high-performing funds and almost the least-likely to be placed into under-performing funds.
Call me cynical, but the choice argument can be seen as a mechanism to give the retail funds, which are generally poorer performing, an opportunity to undermine the industry funds in those remaining areas where funds are mandated. With more money to burn on glitzy advertising, there is a good chance that those without good information will make a poor choice. Even worse, there is a whole industry out there selling self-managed superannuation and charging high fees in the process. Worse still, in some industries, the removal of mandated funds means that the fund the worker ends up in will be the choice of the employer, not the employee. This means employers will simply railroad employees into a super fund choice that is consistent with their interests rather than the interests of the employee.
We know that, in some instances, it is a case of, 'If you want the job, this is the fund that you're in.' I know that the ACTU and unions fear that, if this legislation goes through, the next point of attack by the antisuper warriors within the coalition will be mandated default super schemes. Nominated default schemes in cases where the employee doesn't nominate a fund within 28 days are exempt from this legislation. However, it isn't hard to see this bill as the thin edge of the wedge. We know through enterprise bargaining that some employers already want to change the default fund to one that suits them, not the employees. We also know that this government loathes industry funds. They have never got over the fact that industry funds are there to benefit the members and don't charge the high fees that retail funds do.
The coalition also hates the fact that trade unions are equal partners with employers in governing those funds. It's a fact that, over a working lifetime, industry funds perform better than retail funds. The average annual net rate of return for retail funds is 6.37 per cent over five years and 6.11 per cent over 10 years to September 2019. For industry funds, that average annual net return is 8.42 per cent over five years and 8.3 per cent over 10 years. That is a massive difference of two per cent a year, on average, and equates to tens of thousands of dollars over the long term.
On this side of the chamber we're proud of the industry superannuation system in this country, set up in 1984 by workers sacrificing wage increases for superannuation. Soon after, trade unions invited employees to join them on the boards of new industry funds. Labor then legislated the super guarantee in 1990 and, by and large, it has been one of the great postwar social and economic reforms. Increasing super contributions from three per cent to nine per cent by 2002, our national savings of $3 trillion is almost among the highest per capita in the world, and our potential investment pool is massive. But for Labor, it would simply not be here. And remember, it was opposed by those opposite at every step of the way.
Industry super has given the 60 per cent of workers who had no super in the mid-1980s access to decent retirement savings outside the pension. It also gave the other 40 per cent who did have super a real choice, rather than being trapped in substandard company schemes. But over the last six years this coalition government has refused to do the big things that would have improved super and retirement incomes for everyone. In 2014, they put a freeze on the super guarantee at 9.5 per cent. Nationally, that has meant a loss of around $14.2 billion for 8.7 million workers, by not increasing the super to 12 per cent by 2020 as per the original schedule.
Now there is a debate within the coalition about whether we should increase the SGC to 12 per cent at all. The delayed increase from 9.5 per cent to 12 per cent from 2021 to 2025 is now under threat, despite the denials of the government. Whether that increase to the SGC goes ahead will be an acid test for this government. Further, this government has done nothing about the theft of superannuation by employers. In fact, under separate legislation, they are giving them an amnesty, a pat on the back, and saying: 'Well done. Keep the proceeds of your crime.'
In Australia it is estimated that 2.85 million workers have been underpaid superannuation, costing them $5.94 billion collectively. In my seat of Corangamite alone, around 18,000 workers or 31 per cent of the workforce have been underpaid around $34.2 million. That's almost $1,900 per worker. The government could fix this tomorrow by extending the safety net for unpaid super entitlements, introducing stronger monitoring and enforcement and actually prosecuting employers. Of course, this isn't a priority for this government.
Then there is the shameful proposition coming from one Liberal backbencher and other coalition supporters to exempt people who earn under $50,000 from having super paid and to take their 9.5 per cent SGC as wages. In my electorate, that potentially means 28,000 workers would be exempt. Collectively, they would lose $98.8 million in super and pay an extra $28.4 million in tax. Worst of all, their ultimate retirement incomes would be slashed. Rather than dealing with these big picture issues, rather than giving workers a hand up, rather than protecting workers' super and making sure everyone can access a decent retirement, all this government wants to do is fiddle with and even white-ant the super system. All they want to do is break down the universality of the system to exempt workers from it and undermine the industry funds. Like most things they touch, this government is a wrecker, not a builder. It was Labor that built superannuation. It was Labor that built Medicare and the NDIS. It was Labor that built paid parental leave. Labor builds; the coalition destroys.
This legislation is another example of the ideological fixation that this coalition government has against workers choosing their fund collectively under an enterprise agreement. It is another example of the ideological use of choice to undermine industry funds and promote the interests of the retail funds. On the other side of the coin, they provide no accompanying consumer protections and no guaranteed right to accessible information. Deputy Speaker, you can hear in my speech that while we support this legislation going through the House it is simply to ensure it gets to the other place where it can be examined more robustly.
I rise to make a few brief comments about this bill, the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. If there's one thing that the WorkChoices experience in Australia tells us, it's that when the Liberals put the word 'choice' into the title of a bill you better look at it twice, because under WorkChoices we saw people's wages and conditions attacked, job insecurity start to skyrocket and the balance tilt away from everyday working people, making it harder for people to have any real control over their lives, limiting the amount of money that was in their pocket and, in the process, taking away other choices that they might have, like what to do with an increased pay packet or what to do with increased spare time.
One of the things that the government doesn't seem to understand is that in the workplace a lot of workers and employees would find it pretty difficult to stand up to their employer themselves. That's not because the employer is necessarily malevolent or unscrupulous. It's just because the employer has the power. They have the power to decide what shifts you're going to have, how much pay you're going to get and, in some instances, whether you have a job at all. That's why, generally in this country, people come together in the workplace to negotiate with their employer. They bargain collectively. And those collective bargains are done because workers know that there's strength in numbers and that if you come together you might be able to negotiate things that you couldn't necessarily negotiate individually. In other words, by coming together, you can get yourself a better deal.
That applies across the board to what is in enterprise agreements, and it covers things like wages and it covers things like overtime, but it also can cover things like superannuation. What that has meant over time is that a number of funds that have been cooperatively run between half-half employers and employees have managed to—in part because of enterprise agreements and collective agreements that have been negotiated—build up funds where they deliver pretty good returns for their members. In fact, they deliver better returns than the funds run by the banks.
This idea of people collectively choosing to do something seems to be anathema to the government. Notwithstanding the fact that it might be because people have come together to bargain in a situation that gives them more power, might actually deliver them better outcomes and deliver more money in their retirement, the government comes and wants to attack it. Why does the government want to attack it, dressing it up by talking about choice in the same way that WorkChoices was supposedly about choice but actually took away people's control over their own lives? Why do they want to attack it? There's a very simple answer. The government wants to allow banks to get their hands on people's retirement savings. The government wants to allow banks to have more access to the several billions or trillions of dollars that are sitting in superannuation funds in Australia at the moment. In part, because superannuation is compulsory, it provides an ongoing stream of income into retirement savings, and as there is a growing pool of money, which should be used to make sure that people can have a good retirement and could also be used to invest in Australia's future, the government sees money that instead should be going to the banks. This comes as no surprise. The government takes a lot of donations from the big banks. The big banks give money to this government, and the government delivers for them in return. The government had to be dragged kicking and screaming into having a banking royal commission, in a process that—it's worth remembering—was led by the Greens. The Greens began the process of calling for a banking royal commission. We moved motions in the Senate that found their way down to this place. Senator Whish-Wilson moved a bill to establish a parliamentary commission of inquiry. Then, when the government finally realised the writing was on the wall and that it was about to lose a vote in this House, it decided to call a royal commission. But the government had to be dragged kicking and screaming into taking any action on the banks, when everyone across the country could see that there is a problem with the banks.
The problem with the banks is that in their wealth-creation arms—where they're trying to make money out of products that they sell to people—the banks have got a conflict of interest. These are the kind of products that, when you go and make an inquiry about your bank balance or go in and visit someone in a bank branch, you always try to get onsold—'Have you thought about your mortgage?' or 'Have you thought about life insurance?' The problem with the banks selling you these kinds of products—including super products—is that the banks' goal is to make money for themselves. That's just business; they're a profit-making company. That's what they're there for. The banks' goal is to make some money for themselves. So they're going to sell you a retirement product or a super product that'll be dressed up with lots of bells and whistles, but at the end of the day, the person selling it to you or the executive sitting above them would probably get the sack if it didn't make some money for the bank. That is the whole point of them. Whereas the industry funds—the subject that people negotiate about—are not there to make a profit. They're there to put all the money back in. They're effectively not-for-profit. They're there to put the money back in to increase members' returns.
The government can see this big pile of money sitting there. The banks can see this big pile of money, and they want to get their hands on it so that they can make some money out of people's retirement savings. And one of the things that's standing in the way at the moment is that in some places workers have negotiated collectively, through strength in numbers, to say, 'No, actually—here are the funds that we want. If the employer's got to be compulsorily forced to pay some money into super, here's the fund that we want it to go into.' That then goes into that fund for the worker. Of course, if the worker leaves that job and goes to another job, you can roll your super over. You're not stuck with it for life. But for so long as you're in that job, if it's covered by one of these agreements, then that's where your money goes into, because your fellow employees have come together and negotiated something that is going to work out better in the long run—in the same way that negotiating the rate of pay works out better for you if you do it collectively than if you do it one by one.
But the government—because it takes money from the big banks, and the big banks have said, 'We'd like to get our hands on all of this cash that's sitting there in people's retirement savings and the steady stream of super—has said, 'Well, what can we do to help?' And so the government comes up with this bill that says that even if you in your workplace have all negotiated collectively to come up with a deal that works for you, you are not allowed to negotiate about that. You are not allowed to. And here's the ultimate hypocrisy of this government. The government—in this bill that it says is about choice—is basically saying that you can negotiate and bargain about what you like, as long as it's approved by us, the government. As long as the government has ticked off and said that these are the things that you can negotiate about—sure, you can negotiate. But if you negotiate and choose to do something different to what the government wants, you're not allowed to do it—what utter hypocrisy. If people working in a particular workplace decide that they think it's in their best interests to come together and negotiate something, they should be allowed to do it. Who's the government to step in and say, 'No—you can't do that'?
If we're saying that you can't do it with respect to super—what's next? Is the government going to step in and say, 'You all might have negotiated in this workplace that you're going to get time and a half if you have to work after 6 pm, but we think there should be the right to opt out of that. You're not allowed to negotiate that in your collective agreement'? Is it going to say, 'There's a minimum rate of pay—but no, you should be able to opt out of that as well. There should be nothing compulsory about that, because that's forcing someone to do something'? Well—no. What people have learnt from bitter experience over many, many years is that if you want real freedom in your life, if you want the ability to make choices about things like buying a house, being able to spend time to go on holidays with your family, to have good amounts of time off, you've got to negotiate some of those things and put some walls around it. Otherwise, if you don't put walls around it to protect it, someone will come and try and take those off you. That's what businesses do: they want an edge over the next business. Unless you have a pretty strong level playing field and a strong floor underneath it all, one business will try to take something away to get an advantage over the business next to them. That is just the way that business works.
That's why the debate has got to be about what is the right floor to put in place and what are the right walls to put around it to make sure people get protected. This government, and this bill, is about taking away one of those forms of protection. This bill is about saying that in people's retirement we want to make it easier for the banks to get their hands on your retirement savings and turn it into a product that is not about looking after you on a not-for-profit basis in your long-term interest, but one that is about making money for the banks and for the big retail funds.
So there's a big, big problem with this bill. It's not going to do what the title says, just like Work Choices didn't give people more choice; it actually took away their choice. This bill is going to do the same. It has some real problems. We can't accept the government's rhetoric on this bill. We can't accept their claim that it's going to improve people's lives, because there is a very real prospect that it is going to make people's lives worse. The sad thing about it is that you will find out about it when retirement time comes. You will find out about it when you realise that fees and charges have been taken out of your account over the last 20 or 30 years so that someone—a bank—can make a profit. That's when it will hit. That's why it is important to ensure that the proper protections that we have at the moment remain.
I rise in strong support of the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. Centre Alliance has always supported individuals being the masters of their own financial destiny. For most Australians their superannuation balance determines their financial security in retirement. It is only right and proper that the critical decision on which superannuation fund workers choose to direct their money towards is placed in their hands, in the hands of workers and employees, not in the hands of either businesses or unions. It is well past time that workers should not be forced into particular funds against their choice. This is why Centre Alliance supports workers having their choice of superannuation fund for workplace determinations and enterprise agreements from 1 July 2020. Centre Alliance wrote to Minister Hume in July last year to request these changes, as well as the removal of the loophole that allowed employers to claim salary sacrifice super as employer contributions. I am grateful to the minister for following through on both of these important provisions.
A number of constituents have raised this issue with me. The most common complaint is the from university staff who work casually or part-time and are forced into UniSuper instead of being able to contribute to their pre-existing funds. Because these staff work limited hours, their UniSuper accounts are just eaten away by fees, rather than accumulating within their usual super funds. It is not the intention of the superannuation system to siphon employees' entitlements and add to employers' wage bills only to lose it out to unnecessary and unavoidable fees.
Whilst on balance I would have preferred that the power to choose your own superannuation fund was extended to existing workplace determinations and enterprise agreements, I recognise the practical concerns around disruption and the cost of compliance, especially to small businesses. The bill before us is a reasonable and pragmatic compromise.
I want to make clear that I have no problem at all with working Australians being defaulted into specific superannuation funds. There is, after all, a huge range of funds, and deciding which to choose can be daunting for many. However, I cannot stress enough that the worker should have the power to choose. That is what this bill does. I therefore commend this bill to the House.
From my office, I have been watching the contributions. I was hoping the member for Goldstein was still here, because that was a stunning performance and I wanted to let him know that. He has missed his calling. He is a thespian of the highest order, and, as the member for Moreton pointed out, the hypocrisy was simply stunning.
Labor has a very proud track record when it comes to super. Some of the previous speakers have outlined that. We will continue to fight for a fair superannuation system and play the role we always have with super in order to protect it and make sure that it's going to be there for Australians in their retirement. In the last two weeks I have been to two 100th birthday parties, which is unusual. People are living a lot longer. We have more and more centenarians, particularly in the Territory, which can be a bit warm and is not the easiest place to live at times. It is obvious that we are going to need to provide working people in particular—because it is their interests we want to ensure—with the ability to have the super funds to support their retirement. We created this world-class system and we'll fight to protect it.
We also support choice in super. We're committed to making sure that every worker gets the best possible benefit from their scheme. We need to ensure that working people are informed and that the information enables them to make choices that are in their best interests and not in the banks' best interests. Those on the other side want to protect the banks. We know that. Some of the previous speakers have made that point. They avoided the banking royal commission 26 times, and now it is clear that they are doing the work of the banks. But that's their wont. But let's just be clear about why Labor will continue to protect it. If time allows, I'll relay some words from a senior Territorian in my electorate who wrote to me recently on this issue.
As previous speakers have said, we're referring the bill to the Senate Economics Committee, which is sensible. We will reserve our position on the proposed choice of fund changes until the Senate committee has reported.
Millions of Australians are being ripped off by underperforming funds. This theft just boils my blood. Someone very close to me had an employer who for many, many years was not paying super, when they clearly should have been, and you'll never guess it, the person running the business was incredibly wealthy. The person probably couldn't spend, in the rest of their days, the amount of money they had accumulated running their business, but for years they were ripping off the super of this good friend for mine. Those opposite would like to extend the amnesty—it is not right. This theft is becoming a bigger and bigger problem. In fact, superannuation theft increased by 25 per cent over the years 2013-14 to 2016-17. It may have been even more, were it not for the banking royal commission. We just hope that some of these unscrupulous and unethical companies have started to change some of their practises, but we know that they, with the support of those opposite, will continue to seek every opportunity to take the funds of working people.