Wednesday, 2 June 2021
Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
It's wonderful to be back speaking on this legislation, because it is so important to make sure that we get proper assessment of laws that overgovern superannuation. As I was saying before I was interrupted by question time and 90-second statements, the system is broken. It's designed and organised to advance the interests of the few at the expense of the many. Members of the Labor Party know exactly why it is: because they set it up that way, because what super funds do is launder money through marketing expenses through to unions and allied parties and then through to the Australian Labor Party, which is why, if you come into this chamber and if you raise criticisms of organised labour and unions today, a few people on the Labor side will grumble and get a little bit upset. But, if you criticise the super system, they will go into all-out war, because they know it is their lifeblood. It is coming at the expense of Australians and their retirement savings and at the expense of their wages to bankroll the interests of the Labor Party. The more we call this out, the angrier they get, which means it makes me more determined. There is nothing they will not do to steal your money from your accounts and your super fund to advance their interests. That is what is at the heart of this legislation. Trying to break apart—
Mr Gosling interjecting—
That is what is at the heart of this legislation. That is why they will fight it at every step of the way. We will not stop until we call it out and we stop the misinformation, the misallocation and the misuse of Australians' superannuation money. What we hear from the shadow minister for superannuation in this debate is the most hysterical and ridiculous allegations about the provisions in the bill which say the Treasurer can override the waste and mismanagement of Australians' superannuation funds towards activities that have nothing to do with retirement savings—absolutely nothing. That is what is happening right now, with the waste that is going towards TheNew Dailyso they can buy the interest of journalists who then go on to taxpayer funded organisations to misrepresent the interests and the issues that affect retiring Australians. There is no integrity at the heart of this system. There is no integrity in their focus on trying to buy off Australians through the system that they have designed.
Listen to the hypocrisy in this chamber from the Labor Party. They claim they're against the illegal payment provisions in this bill. But dare to suggest, 'Okay, let's remove the provision that's already in superannuation legislation which says it's illegal to use your own money'—your own money—'to buy your own home,' and they say that must stay in the law at all costs. That is how hypocritical they are. If you genuinely believe that there should be no limitations on how members' money should be able to be spent by super funds, then allow Australians to use their superannuation money to buy their own home. You know, as I know, that the foundation of financial security in people's working life, and retirement, is home first, super second. But they do not want that, because they know it means empowering Australians and their families to take control of their financial interests for their own lives. That is why we believe in it so strongly, and we will not stop fighting.
These laws go to the heart of what we stand for and who we want to empower. The debate around superannuation is not just one about retirement incomes and savings, as critical as they may be. It is a debate about power and who we want to empower. Do we want to empower fund managers or families? It's fund managers on the opposition side and families on the Liberal side. That is who we are. That is what we stand for. When Australians look at their finances, they should be able to make a choice. They should be able to choose how they spend their money and prioritise their financial interests.
Let's look at the hard data. In 1992, there was about $280 billion in retirement savings in Australia. Since then, it has increased by a factor of 1,400. Just in case there is any ambiguity about that, that's 1,400 times. And what has been the decline in dependence on the pension over that same time frame? Is it 1,400? No. Is it 1,300? No. Is it 1,200? No. Is it 1,000? No. Is it 100 per cent? No. Is it eight per cent? No. The answer, according to the Callaghan report, is that it has gone from 67 per cent of Australian retirees needing support from the pension to 65 per cent. Have you ever seen such a massive accumulation of wealth in the hands and control of a few fund managers, at the expense of Australian families, for so little gain? No, but the Labor Party likes it that way. They know that, through it, they can control and bring organised capital and organised labour together to decide the future of this country, bypassing this parliament. They use that capital to buy ownership of companies and they then impose on them their own values, bypassing this very chamber, elected by the people of Australia. They know that, under the fund management system, no-one's elected; they're just appointed by their mates. And they threaten and bully any business in this country who dares stand up to them, like they threaten and bully and want to intimidate this chamber. That is why we won't give up. This isn't just a debate about retirement savings, though it is that; it's a debate about power in our country and where it rests—with the people, with families, with elected representatives, or simply in the hands of a few fund managers. That's why they like it that way and that's why they hate this legislation so much. They see it as a break on their control. It empowers Australians instead.
We have to keep fighting. That has always been at the heart of the structure of the Labor Party. They want a corporate estate—big capital, big unions, big government, working together at your expense, where the people of Australia have no control over their own lives. They want Australians to be serfs to their own superannuation funds.
Let's look at the facts. They argue that Australians shouldn't be able to use their superannuation to buy their own homes and get on the first rung on the ladder to provide the foundations for retirement security as well as their working life. Yet let's see their criticism when Cbus spends $800 million of your Australian money to buy properties that it owns and that it will rent to you. This is a corrupt system that needs to be called out. They will use your money, the people of Australia's money, to buy homes that they own and that they'll rent back to you. But if you dare stand up and say, 'I want to use my super to buy my own home,' they'll say, 'Destroying the system.' This system is designed to favour the few at the expense of the many. They only have to take small clips along the way. When you've got 26 million people legally compelled to contribute money into an account, they only have to take $5 or $10 a year, laundered through the unions and marketing expenses and heading back to the Labor Party, to take a massive share of the wealth of the nation that they control.
That is what happens every day, and if you try to breathe any accountability into this system, they fight it every step of the way. They ought to be ashamed of themselves. Go and look at the House Economics Committee. In this term of parliament, we've continually asked superannuation funds about their expenditure. What do unions do and what do the industry funds do? They refuse to answer. They launder their money through IFM investors to fund their super funds. As soon as it goes in, they say, 'We're not accountable to the parliament of the people of Australia anymore.' How can you stand by this system and the corruption and the misuse of—
Mr Gosling interjecting—
How can you stand by this system that massively disempowers Australians, launders money into different funds, where it becomes unaccountable, and then they refuse to answer questions put by the parliament of the people of Australia. That is what happens. They keep things secret from the people of Australia, while coming into this chamber and demanding that we are compelling the people of Australia to give them more money. It is so corrupt. It is so founded on fleecing people and their wages, as the Secretary of the Treasury said in estimates only yesterday. Every increase in superannuation contributions comes at the expense of the wages of Australians today, but if you dare point that out, you get hounded down by members of the opposition, by the industry funds who use your hundreds of millions of dollars—nearly half a billion dollars over the past five years in advertising and marketing campaigns to make the claim that they're saints, when they're not. This is a symbol of your money being taken from you and controlled by others.
This bill doesn't fix all of those problems. But this bill at least requires these funds to make sure, when they take your money, Australians' money, that it has to be used in your interests, a novel concept, I know. The more we see of that, the more we'll get accountability and less fleecing of the people of Australia. (Time expired)
The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 introduces several schedules which make changes to Australia's superannuation system. Superannuation works in concert with the aged pension and voluntary savings to deliver Australians a relatively high quality of life in their later years. Australians now have over $3 trillion invested in super. I'd like to thank all those that have contacted my office to give feedback in relation to this legislation. Australia's superannuation system is highly regarded around the world, despite the rants that we've heard in this place. Australia is ranked seventh in the OECD in terms of private pension assets as a proportion of GDP. Overall, the Melbourne Mercer Global Pension Index ranks the Australian retirement system third in a field of 37 countries. In my view, it is essential that Australians are comfortable and secure and can lead a great life in their twilight years, and super is integral to that goal. Yet there is always room for improvement.
The recent Retirement Income Review, the royal commission into banking misconduct and several Productivity Commission reviews create the case for further change to the super system. I should note: if only we heard the same passion from the member for Goldstein in relation to the recommendations of the royal commission into banking. Seeking to implement recommendations arising from these reviews, overall, this bill makes some sensible amendments to improve the function of the super system. But there are some elements that are very concerning and which seem to ignore industry and community feedback and should be rethought.
Schedule 1 of the bill will make changes to the Super Guarantee (Administration) Act 1992 to limit the creation of multiple superannuation accounts for employees. The amendments implement the government's responses to recommendation 1 of the Productivity Commission's report, Superannuation: Assessing Efficiency and Competitiveness, and recommendation 3.5 of the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. This phase of reform will commence on 1 July 2021. From then, employers will no longer automatically create a new superannuation account in their chosen default fund for a new employee. Instead, this schedule will establish a stapling system whereby the employer obtains information about the employee's fund from the ATO if not provided by the employee.
This will mean that, as an employee, your super fund follows you between jobs. This is a good thing, and will ensure that your money is compounding in a single account over time instead of multiple accounts. This provision will also reduce red tape and paperwork for businesses and individuals. Generally, this provision could make the system more efficient and more effective, but there is a concern. Funds should be performance tested before they are stapled. We can't have a situation where employees are stapled to a nonperforming fund. Right now, a poorly performing fund could be linked to an individual, and this will lead to suboptimal financial outcomes for that person. The government is aware of this deficiency and should take steps to fix it.
Schedule 2 of this bill will amend the Superannuation Industry (Supervision) Act 1993 to require the Australian Prudential Regulatory Authority to conduct an annual performance test for MySuper products and other products which will be set out in regulations. MySuper is the type of account you can have with a super fund. It's the default account that your employer will pay your super into unless you choose a different option. MySuper accounts typically offer lower fees and simple features. According to the bill's explanatory memorandum, these amendments will seek to ensure that superannuation products have their performance assessed against an objective, consistently applied benchmark, giving greater transparency to beneficiaries and protecting beneficiaries from underperforming products.
A superannuation trustee providing such products will be required to give notice to its members who hold a product that has failed the performance test. Where a product has failed the performance test in two consecutive years, the trustee is prohibited from accepting new beneficiaries into that product. The regulations will specify circumstances which must be satisfied in order for APRA to lift the prohibition. Future regulations will prescribe other products to be included in the testing. APRA will also be provided with a prudential standard making power in relation to resolution making. This schedule will, if applied correctly, increase transparency and accountability in the super system, and I support that. Members of funds will be the beneficiaries if this is properly applied.
I've outlined some concerns about performance testing previously. All products must be tested. So I call on the government to make sure that the regulations mandate that all funds be tested. In addition, the government should consider increasing the lead time on the commencement of this schedule from after this bill receives royal assent to later this year or the next. This is because some products won't be tested in time to be vetted before stapling, and we could have a situation where people are stapled to funds that have not been performance tested, and that would be a compounding disadvantage for many years. The government should set out the mechanism in the regulations where trustees can appeal decisions taken by APRA in relation to performance test outcomes. Time should be taken to sort through these issues.
I have grave concerns about certain elements of schedule 3. It's quite interesting that these powers are in fact being provided by a coalition government, because much of schedule 3 goes against liberal values when it comes to not intervening in the market. Schedule 3 makes amendment to the SI(S) Act to require each trustee of a registrable superannuation entity and each trustee of a self-managed super fund to perform the trustee's duties and exercise the trustee's power in the best financial interests of the beneficiaries.
The intent of this aspect is to increase the accountability of superannuation trustees in relation to the execution of their fiduciary duties. While it might seem sensible on face value—certainly after the blustering that we've heard in this place—it may have far-reaching consequences that will not be in the best interests of members, and it could impact, in fact, the interests and wellbeing of members. It's because, when considering whether something is in best financial interests, we could also capture a large number of activities and investments that exist in a grey area and that may become beneficial. For example, it could be that Australian Ethical super purchasing carbon offsets or spending money planting trees to reduce emissions—something which their members arguably want—could be prohibited under the best financial interests covenant as, without a price on carbon or an emissions trading scheme, it simply won't be given a financial value.
Adding 'financial' to 'best interests' is something I'm concerned about. The government claims that this change arises from the 22nd recommendation of the Productivity Commission's review into superannuation, which recommended the government pursue a clearer articulation of what 'best interests' means but also left open by what mechanism it could occur. The Law Council of Australia, Commissioner Hayne of the banking royal commission, the Australian Industry Group, the Australian Institute of Company Directors and so on have all rejected the need for any legislative change. Commissioner Hayne, for example, stated:
I consider that the existing rules, especially the best interests covenant and the sole purpose test, set the necessary standards. Those standards should be applied according to their terms and without more specific elaboration.
The Australian Institute of Company Directors said that this issue:
… was recently considered by Justice Jagot of the Federal Court in in APRA v Kelaher  … It was the submission of all parties in that case (including APRA), and accepted by Justice Jagot that "the best interests of the beneficiaries are normally their best financial interests".
The Law Council, in its submission to the exposure draft of this bill, stated that it understands that the current effect of section 52 is that the best interests of beneficiaries are normally, but not always, considered by the courts to be their best financial interests and that this provides for appropriate flexibility, practically, when applying this clause. So I ask: why is it therefore necessary to amend that section, if it normally means best financial interests and is believed to have all the necessary flexibility and practicality built in, especially as it could have far-reaching negative consequences for many different activities?
The reversal of the burden of proof set out in schedule 3 makes amendments which reverse the evidentiary burden of proof in relation to civil proceedings in the event of a contravention of the covenant of best financial interests. This is problematic. Reversing the burden of proof is usually reserved for grave civil or criminal offences. Compounding this, the provision also lacks a materiality threshold. Anything and everything could be considered by the regulator. I quote CPA Australia, who outlined the problems with this arrangement:
… this means … that a decision of any magnitude can be queried by the relevant regulator, requiring trustees to produce evidence on all occasions that trustees have acted in the best interests of members.
APRA should therefore provide guidance as to what level and kind of expenditure will be scrutinised. They should also detail what kinds of records are to be kept, because we have to be clear. An increase in operating costs that would flow from this compliance requirement will be passed on to members, so ultimately it will be members of funds that will pay the price.
Schedule 3 has one more change that needs to be highlighted. The bill amends the SI(S) Act to allow regulations to be made to specify that certain payments or investments made by trustees or registrable superannuation entities are prohibited, or prohibited unless certain conditions are met. I find this is a most outrageous provision, certainly coming from a Liberal government. The government claims that this regulation-making power is appropriate to ensure there is sufficient flexibility for the government to respond quickly to evolving industry practices as needed, and any regulations made would be subject to parliamentary scrutiny and disallowance. This highly politicises a question of commercial decisions. This means the Treasurer is being given the power to overrule the fiduciary duty, the commercial decisions, made by the trustees of superannuation funds. This power was not a recommendation of either the Productivity Commission report the government is relying on or the royal commission final report. The government states that it was recommended by APRA, but APRA also did not say what form this power could take. So it does beg the question: why is the government seeking this power?
Of all the sections in this bill, this one is the most alarming for my constituents in the feedback I have received. They fear that it could be used to block investments in clean technologies or programs that promote social good. I agree with the Australian Institute of Company Directors, which believed that this clause would 'allow the government of the day to fetter the discretion' of superannuation funds and directors and their ability to make 'legitimate expenditure'. The Australian Industry Group also stated:
The approach would create a red tape nightmare in the oversight of superannuation funds. Instead of concentrating on running funds in the best interests of their members, funds would be embroiled in compliance with an exceptionally intrusive regime.
The threat of this ban and the uncertainty it generates would also affect how assets are priced due to increased regulatory risk. This is compounded by the latest draft regulations, which offer no forward guidance about the criteria for banned activities. To remedy this the government should amend the provision to that banning of investment activities so that it must meet a public interest test and must be first referred to the minister by APRA at the very least.
This bill will introduce some measures to make super more efficient and effective. While it may improve efficiency, it is undermined by the very problematic provisions of schedule 3. Whilst the government claims to be focused on efficiencies and better delivering for members, I would argue that there are some really concerning interventions and inclusions in this schedule that should raise a lot of alarm bells. I recommend the government go back to the drawing board on schedule 3 and re-engage with stakeholders.
Universal superannuation is a great Labor reform. It's one that we're proud of. It is not only making a difference to people's lives in their retirement; importantly, it's a ballast for our national economy. We are the envy of the world, with $3 trillion in superannuation funds to make an extraordinary difference to our national economy so that at a time of crisis there is a pool of national savings that helps to create jobs and helps to provide that certainty in our national economy, particularly during times of difficulty, as we're seeing with the pandemic. The truth is that this pool of savings has helped Australia during this crisis and has helped to stop predator hedge funds hoovering up distressed Australian businesses during the COVID pandemic. Superannuation is safeguarding both Australian workers and Australia's national sovereignty.
The coalition have never believed in universal super. They opposed it at the beginning, and they continue to undermine it each and every time they have an opportunity. Those opposite aren't true conservatives. They don't have respect for institutions. They're vandals when it comes to attacking the institution of superannuation.
Raids on super during the pandemic meant that people were robbing their own futures. We have 600,000 people who will be left with zero in their superannuation accounts because the government refused to provide them with other support. Casual workers, particularly younger people, were encouraged to take money out of their super, which will not only have a negative effect on their retirement income down the track; it will also make an enormous difference to our national economy, because it will place greater burden on future budgets. This is a government that had $1 trillion in debt. It gets worse over coming years, rising to $1.1 trillion then $1.2 trillion then $1.3 trillion. They have no plan on those issues.
What they have a plan for, though, is to continue to undermine our superannuation system. Every single increase in super has been opposed by the coalition. This Prime Minister is trying to cut your super. Most cynically in recent times, out of all the attacks that have occurred on superannuation, was when the government announced a plan to let the victims of domestic violence raid their own superannuation to fund their own escapes from violent relationships. This would have made them victims twice over: not only victims of domestic and family violence but victims in terms of paying for their own escape down the track—reducing their own savings. They did scrap that plan, after heavy criticism. But you just know that, given a chance, it will be back. It will be back because they don't get it. They just don't understand superannuation. This Prime Minister has a tin ear, and we know he has a heart of stone.
We also know that, at a time where they discovered they probably should have a women's budget statement, they re-introduced it, after they abolished it in 2014 when, I kid you not, Tony Abbott was the then minister for women as well as Prime Minister. We had the extraordinary circumstances during that debate where they wanted to undermine superannuation further and place further pressure on the victims of domestic violence. One of the things that we know that occurs in domestic violence situations is further intimidation of the victims. Can you imagine the pressure that would have been placed by perpetrators—who, by their very definition, are people who don't have ethics about placing pressure on women—saying, 'You go and raid your super.' It's extraordinary that this government doesn't get it.
But this government, of course, does want Australians to retire with less. They want Australians to work without proper compensation, having frozen wages effectively for eight years. Over the next four years, wages are actually going to go down. What is their argument about superannuation and wages? These frauds opposite argue that somehow there's a connection that if you have less super then you'll have higher wages. The problem with that is that during the last eight years you've had stagnant wages at the same time as they've held off and broken commitments that they took to the 2013 election and the 2016 election that they would not freeze super. Of course, in 2019, they tried to do that as well. Now they've had a little back-off, just on the eve of the next federal election. But we know that they're opposed to the increase up to 12 per cent in superannuation.
This is a government that has presided over and brought down a budget that will have lower wages, low growth, low productivity and lower workforce participation. What a quadrella from this government. The fact is that when super was increased from four per cent to nine per cent, wages increased. They increased during that period. But under this government, of course, we've had stagnant wages and stagnant superannuation. The truth is that superannuation also provides a boost to our national economy. The truth is that the savings that can go into infrastructure investment, that can go into investment, that can go into strengthening our national sovereignty—that is something that should be applauded by those opposite. But instead of that we have this rubbish legislation that's before the House here.
This bill follows on from their budget and introduces three elements. The first is a new system to staple individual members to a single super account. Imagine what will happen there. Imagine the big banks going out there, offering a product, signing someone up, saying, 'We can give you this account, rather than industry super.' They'd had it with industry super, because it's too successful. It's too successful. Remember the big review they had—industry super versus retail funds? What's more successful? Industry super. They had a whole royal commission. Here it is: a royal commission into the banking superannuation and financial services industry. What did they find? They found all sorts of shenanigans in the banking industry and all sorts of shonky activities in financial services, but what they found with industry super was good returns for members. But, because there's a connection, a proud connection, with the trade union movement, they're against it and, therefore, they just attack it. But what they want is to have that stapling of accounts so that if you're stuck in an account that isn't delivering or in an account that has high fees then you're in there for life.
The second element is a new system to test the performance of certain funds. But, of course, what this bill, as it's currently drafted, does is introduce performance benchmarks that penalise a fund for investing in unlisted Australian assets such that Australian super savings can actually go to the United States but not be used here. Gee, isn't that smart? The bill also proposes to lock members into underperforming dud funds. A young worker who enters the super system for the first time may find themselves locked into that poor fund as they get older. The bill also ignores admin fees in the performance benchmarks. Can you imagine that? It just ignore them. It gives a green light to bad funds to increase their admin charges at the expense of member accumulation.
Despite their being the so-called champions of the market and free enterprise and boardroom sovereignty, the thing that should torpedo this legislation more than any other is the measure that gives the bloke who sits over there, the Treasurer of Australia, the right to veto an investment that a superannuation board considers to be in the interest of their members. Think about what the Minister for Resources, Water and Northern Australia did in vetoing funding from the Northern Australia Infrastructure Facility to a windfarm that would have created 250 jobs in North Queensland. He intervened and vetoed it. No problem. Nothing to see here. What they want to do is allow a Treasurer to determine what a board does. You hear from those opposite when it comes to super: it's the people's money. This bloke thinks it's his money! This Treasurer wants to control what happens in individual super accounts throughout the entire country. It is absurd.
We know, with the political interference and the views of those opposite, that they'll be vetoing renewable energy projects. We know they'll be vetoing projects they don't agree with, unlike the superannuation funds and the role they play in infrastructure investment in this country, whether it be public transport projects, like the Gold Coast light rail—the possibility that you had there in terms of investment in our ports. I mean, this mob—and we had a bit of a debate today about national sovereignty—couldn't stop a Chinese-government-linked entity buying Darwin's port, but they want to stop superannuation funds of Australian workers owning ports around Australia! That's their view. What a farce!
On this bill, as to this provision, I've got to say: in a totalitarian state is where it belongs. It's a provision that allows a Treasurer to veto funds that are not government funds and veto where they invest their money. That is something that occurs in totalitarian states, not in a democracy like Australia. And that is why this bill should be rejected.
Look at the impact of this bill. You would think that this bill, if it were really positive, would actually have a positive impact on growth. But have a look at it. It's a $46-million impact on the budget—not lifting it; driving it down! It's another masterstroke by these so-called economic managers. 'Economic managers'! They've given up on fiscal policy. They treated Australians like mugs when they came in here and said that the budget was already in surplus, when it wasn't. They got elected promising a surplus in their first year and every year after. But they always seek to undermine Australian national economic sovereignty. They did that when they drove car-makers offshore. They did that when we lost 90,000 jobs in manufacturing. They're doing that by ignoring, instead of embracing, the opportunities that would come from dealing with climate change and, in doing so, creating jobs and driving down energy prices as well as emissions.
They're also doing that in undermining superannuation for ideological reasons. They just don't like the fact that workers can own capital—that workers can be in that position. For the first time, we're a net exporter rather than an importer of capital, because of the strength of our superannuation funds.
And thank you, Paul Keating, for this reform and for this vision. This is a proud Labor vision, superannuation. We will defend it. We will argue for it, because it's in the interests of workers but also in the interests of our nation.
The fact is: those opposite can't be trusted. They are not on the side of Australian workers.
We, in the Labor Party, are on your side. That's what we say to those people who understand how important superannuation is to the quality of their retirement and to our national economy.
I rise to speak on the merits of this bill, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021, and to document some ongoing concerns I have with its provisions. As an Independent, I have the privilege of assessing each bill that comes through this place on its individual merits, and this bill is no exception. I've also made sure I've consulted deeply on this bill. I've heard from constituents and small businesses across Indi about super reform, including through an online budget survey which received over 1,400 responses from my constituents just last week. I've met with representatives from various super funds who would be immediately affected by these reforms. And I've met with the minister responsible for this bill, to ask her about the evidence, upon which the government is relying to justify these reforms, from the Productivity Commission, the Senate inquiry, the royal commission and industry consultations.
On the whole, straight up: this is not necessarily a bad bill. It seeks to prevent workers from racking up multiple super accounts and unnecessary fees. It creates an ambitious performance test, to make sure our precious retirement savings are not squandered away in poorly performing funds with no accountability. It also sets up an online tool that would make it easier for workers to assess how well their fund is doing and make an informed choice about whether to invest elsewhere. These are all well-intentioned reforms that I can support. But there are parts of this bill, particularly the directions powers given to the Treasurer in schedule 3, which I simply cannot support, on behalf of the communities of Indi. I know there are members on both sides, including the government back benches, who share these concerns and I commend them for doing so publicly in the House.
I'll now turn briefly to each schedule. Schedule 1 introduces a new stapling system which will ensure that workers keep the first super account they open unless they make a proactive decision to change. Unstapling is a good thing if it's done right. Australians pay $30 billion per year in super fees which are among the highest in the world. More than one in five Australians have unintended multiple accounts, and some estimates have Australians wasting up to $6.5 billion per year on avoidable costs and fees. So we should be doing all we can to stop this dreadful waste. But the fact of the matter is you can't staple people to their existing funds overnight and expect to solve that problem.
The Productivity Commission explicitly recommended that super funds be subject to performance testing before introducing stapling, and there's an important reason for this: we shouldn't be stapling workers to an underperforming fund. Current Treasury estimates suggest 21 out of 77 MySuper products currently held by around three million Australians would fail the performance test. We also know Australians are sticky decision-makers when it comes to their super. If we staple three million people to underperforming funds, we risk keeping them stapled for years to come, especially if performance testing doesn't work out as expected or if people don't end up using the comparison tool, like we've seen with other government-run comparison tools—for example, in the energy market. Sure, the Australian Prudential Regulatory Authority publishes heat maps that show economists and other experts how well funds are performing; but those maps are buried in 1,000-page reports deep in government websites. No worker is looking them up.
At the end of the day, stapling before performance testing doesn't kill this bill, but it sure makes it a risky one. We're essentially banking on a lot of ducks falling into place down the track to make sure that this bill works properly. A better bill would have mandated testing for two years before stapling, and I'll support any detailed amendments to that effect. But I won't oppose the bill on this basis.
I've also heard a number of other concerns about schedule 1, including the administrative burden it will place on the ATO to have stapling ready to go in just four weeks time; the possible impact of stapling on workers in high-risk industries; and the risk that stapling will encourage super funds to engage in predatory marketing, with young people signing up in their first job so that the funds get them for life. I'm less worried about these concerns and, on balance, could support schedule 1, amended or unamended.
Schedule 2 establishes a new performance test that goes beyond the current CPI-plus industry benchmark. If funds fail this new test, they will face a number of consequences. If they fail the test repeatedly, they'll be prevented from signing up new members and eventually driven out of the market. Again, performance testing is a good thing if done right. For example, it wasn't until a few weeks ago that the government decided to include administrative fees as part of the performance testing. This exclusion created a concerning loophole that would have allowed unscrupulous super funds to game the performance-testing system. So I was pleased to see that change.
But my biggest concern with this part of the bill is that the performance test will apply predominantly to industry super funds first, before the retail funds. I've spoken to a few members in this place who are reading the tea leaves here, suggesting that the government wants to create a run on industry based funds. This may be true or it may not be true, but one thing is clear: we can't have rules for some and not for others, not when the stakes and figures are this high. There's over $818 billion in assets under management in industry funds and over $630 billion in retail funds. The data is there right now to performance-test all products. There should be no excuse. I'll be pleased to support any detailed amendments that fix this oversight; and, if it's not fixed, I'll work with colleagues in this place to put pressure on the government to do so through immediate regulations.
But schedule 3 of the bill is a whole other beast. Section 117A has been criticised by members on both sides of the House, and I wish to add my voice to that chorus. That section would give the Treasurer a broad and unilateral power to block certain kinds of investments super funds are making purely because the Treasurer believes they're not in the members' best financial interests. We're talking about pure political decision-making here. This power could be used to strike out clean investments in renewables overnight without justification. It could be used to defund important corporate social responsibility programs that promote women in executive leadership or create cultural diversity on ASX 200 boards. The truth is though we have no idea how this power would be used, and it would create an unacceptable level of sovereign risk in a $3 trillion financial industry that no-one has asked for and could be totally avoided. I cannot find one recommendation, one report, one stakeholder, one local business or even one constituent who supports this provision. Whatever the rationale, it's simply unacceptable to me.
APRA currently has broad powers to intervene when super funds are not acting in their members' best financial interest. APRA makes its decisions based on fiduciary duty, not political whim and opportunity. If the government believes that APRA could be better equipped to enforce that power independently, then it should support it to do so—not call it in and turn independent regulation into a political playground. I've see no reason to support schedule 3, and it's on this basis that I will be opposing this bill.
Before I conclude, I'd like to speak briefly about the superannuation reforms that are not in this bill that the government has floated in recent months. Earlier this year, there was the inane suggestion that women fleeing domestic violence could dip into their super to access emergency funds to help them move into safer temporary accommodation, access psychological support services, cover lost income from time-off and so on. This suggestion is offensive on so many levels. Victims of domestic violence should not have to bear the financial burden of escaping a situation which was not of their doing. That is unnecessarily punitive and callous. It also totally misunderstands the experience of women facing these horrific circumstances. No person fleeing domestic and family violence would have the psychological bandwidth and patience to wade through the necessary paperwork. The average Australian doesn't know who their super is with and what their balance is let alone in the middle of a crisis. And the average woman in Australia retires with 47 per cent less super than men in this country.
A big part of that is the result of the gender pay gap but it's also because the government has missed some opportunities for more productive ways to empower women through superannuation reform. Right now employers are not obliged to make super contributions to women on maternity leave under the paid parental leave scheme. That's a straight up lost opportunity and straight up discrimination. I welcome the government's decision to abandon the $450 minimum threshold super contributions on budget night, but I believe the government could have gone much further for women, and I really encourage them to do so, just like I encouraged the government to take a close look at the deficiencies in this bill and correct them, so that MPs on both sides of this House, including the government's own backbench, can support it.
I rise to speak on this legislation, Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Every day Australian's expect their superannuation fund to work as hard as they do. That is why the Morrison government is introducing a suite of reforms to ensure the superannuation system meets the demands of the modern workforce and is always working to promote member outcomes.
This legislation will ensure the sustainability of the superannuation system going forward by promoting efficiency and guaranteeing the retirement saving goals of Australians and ensuring they protect against vested interest from those who manage their money. In total, this package will save Australians $17.9 billion over 10 years. That's almost $5 million of benefits each day.
This legislation is centred around three key elements. Schedule 1: firstly, we are limiting the creation of multiple superannuation accounts for employees who do not choose a superannuation fund when they start a new job. The amendment specifies that in the situation where a new employee fails to nominate a fund to receive contributions but it is identified that an employee has a stapled superannuation account, then contributions must be made to that stapled superannuation account. Only if a stapled fund cannot be identified may the employer make contributions on behalf of their employee to the employer's chosen default fund. Likewise, employers cannot make contributions in accordance with a workplace determination or enterprise agreement unless a stapled fund cannot be identified.
We are introducing these changes following feedback from stakeholders and recommendations from the Productivity Commission's report Superannuation: assessing efficiency and competitivenessrecommendation 1—and the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry—recommendation 3.5. Currently, if an employee does not choose a fund, their employer must satisfy the superannuation guarantee by making contributions on behalf of their employee to the employer's chosen default fund. However, in the Productivity Commission's report, it was identified that this law led to unintended multiple accounts, which it called a 'structural flaw' of the superannuation system. It fails to meet the demands of a modern workplace, where people routinely change jobs. It also erodes member balances through unnecessary fees and insurance. In fact, I had the experience myself, with a number of different superannuation funds and a number of different fees being paid across all of these different super funds. So I'm actually someone who had this exact thing happen in my life, being someone who worked part time and in different jobs across my professional career.
In sum, it is not user friendly and is not serving Australians as well as it should be—in particular, women, since they are more adversely affected because they often have part-time jobs and are working in a number of different jobs. The Hayne royal commission identified the same issues.
Secondly, looking at schedule 2, we will require APRA to conduct an annual performance test for superannuation products. Beneficiaries must be notified if their product has failed the performance test. Should a product fail its performance test in two consecutive years, the trustee will be prohibited from accepting new beneficiaries. This amendment is also in line with recommendations from the Productivity Commission, which identified that consistently underperforming funds undermine the superannuation system and, ultimately, the hardworking Australians it is designed to serve.
The intention is to assess the performance of superannuation products against an objective benchmark. This will be done by the creation of the government's new, interactive Your Super comparison tool. This will ensure greater transparency for beneficiaries and protection from underperforming funds which compromise their retirement savings goals. The YourSuper tool is expected to boost retirement savings by $3.3 billion over 10 years. It is also important to stress that this amendment is not a toothless tiger. As noted, there are serious consequences for failing the performance test twice: the trustee is prohibited from accepting new beneficiaries.
There is also schedule 3. We are looking to tighten the rules and regulations governing the trustees and directors of superannuation funds, including self-managed super funds, to ensure they are held to a higher professional and legal standard and are always acting in the best interest of the beneficiaries. Among other things, this includes mandating that trustees and directors of superannuation funds exercise their powers in the best financial interest of their beneficiaries. It also involves tightening record-keeping obligations contained in regulations by making contraventions a strict liability offence. This provides regulators with an additional option to respond to compliance issues relating to record-keeping requirements.
Under existing arrangements, trustees and directors are required to promote the financial interests of the beneficiaries, but this obligation lacks clarity and has allowed trustees' and directors' misconduct to fester, as was made apparent in the Hayne royal commission. In line with recommendations from the Productivity Commission—in particular, recommendation 22 of the Productivity Commission's superannuation inquiry—this amendment imposes a clearly articulated, unambiguous and stringent obligation on trustees and directors to act in the best financial interests of beneficiaries. Given the compulsory nature of the superannuation system, Australians expect and deserve their funds to be handled in a way that is centred on securing the best possible outcomes for them.
This legislation forms part of the Morrison government's suite of superannuation reforms, which are firmly centred on ensuring Australians have the best opportunity to be financially secure in retirement. After all, that's what this great system has been built for. We are providing targeted, tangible and practical measures to provide choice and control in superannuation. We've scrapped exit fees that stopped Australians accessing their own money. We've capped the fees on low-balance accounts of less than $,6000. We've bolstered the ability of older Australians who are nearing retirement to streamline their super, allowing them to make up to three years of voluntary contributions in a single year. We've also introduced legislation through the Australian Taxation Office to more proactively reunite the amount of a rollover fund with a member, where they have an active superannuation account. This is all about ensuring the long-term sustainability of the superannuation system, which can only be achieved by ensuring it keeps on working for its members.
I'm particularly proud that we've also made real and tangible adjustments to superannuation for women. The low-income superannuation tax offset has benefited over 1.9 million women since 1 July 2017. The government's superannuation payment of up to $500 to help low-income earners save for retirement has seen over $500 million in super contributions made to eligible women who earn less than $37,000 a year. We've also introduced catch-up concessional contributions. These allow women who may have taken time off over a financial year to have a child or look after a sick loved one to make up their personal superannuation contribution amount in the following financial year.
Last year, during the COVID 19 pandemic, Australians were also allowed to use their superannuation to support them financially through what the world would say were unprecedented times. As the Prime Minister said in March last year when announcing the policy, it is their money, after all. The initiative allowed those financially affected by the pandemic last year to access up to $10,000 of their superannuation early. There was no tax payable on superannuation released under this arrangement, and Centrelink and Veterans' Affairs payments were not affected. It certainly helped a number of my constituents get through a very difficult time, in addition to the other support mechanisms that the Morrison government rolled out, such as the well-known JobKeeper and other initiatives. This enabled more than 3½ million Australians to access their money when they needed it most. For some in my electorate of Higgins this temporary arrangement proved to be a lifeline and helped to keep them afloat during difficult times. Let's hope with the recent Melbourne outbreak that we are going to have a very short lockdown and that we don't have to deal with the financial distresses that were faced by Victorians last year.
On the surface, this legislation may seem complex. However, at its core the goal of this legislation is simple: ensuring superannuation funds work as hard as Australians do. Since superannuation was introduced almost 30 years ago the landscape has changed. The system now holds almost $3 trillion in savings. We are introducing these reforms to ensure it can meet the challenges of the modern workforce and is transparent and user friendly. Importantly, these changes will ensure superannuation funds are always working in the financial interests of their members and not in their own. I commend this bill to the House.
I sit under a big picture of Black Jack McEwen and Red Ted Theodore. Black Jack McEwen said the important thing in government—the most important thing in government—is to get it right. Education is no replacement for hard work and getting it right.
I don't wish to denigrate other members of parliament, but the standard of debate on this bill has been very, very low indeed.
Honourable members interjecting—
If you listen to me, you might just know a little tiny bit about it. I made my living, for six years before I went into parliament, selling superannuation. I did very well out of it, thank you. I'm very proud of the contracts that I sold. Up until the 1990s—the start of the free market economics that dominate this parliament to this very day—there was a 60-40 rule: 60 per cent of all superannuation went into government securities. So it should. I mean, you put it away for your retirement. You've saved all of your life to get a benefit, and if it's not there when you retire, there's going to be a lot of heartbreak: you work all your life to retire, but you can't retire. That was the idea of the 60 per cent going into government securities: so that you knew you had security for your retirement. Unless the government was going to go bankrupt, you had security in your retirement.
I had agencies with a very, very prudential corporation, and they were all stodgy investors—very, very stodgy. I was marketing AMP investment plans. They were tailor-made investment plans, but the contract was with the AMP. With an ALA contract with the AMP society you put in $2½ thousand a year and, with bonuses, after 50 years, when you hit retirement age, you would get $1 million.
Now, I put—we all put—$23,000 a year into our compulsory superannuation. I get back $1 million, if I want a lump sum. So I put in $23,000 and get $1 million. On the ALA, I put in $2½ thousand and got back a million dollars. The last speaker talked about how wonderfully these funds perform. If you go back to the AMP—my wife has a contract with the AMP, and her retirement fund is less now than it was three years ago. I'm not privy to it, but I presume she's putting $1,000 in a year or something, or whatever it is, but it's going down, not up. Let's say I was putting in $4,000 a year for 50 years. That's $200,000, but I was going to get a million dollars out of that. Well, she's putting the same amount of money in, and it's going down, not up.
Why is it going down? Well, because the CEO class runs the world. Everyone in this place should have read Piketty's book on how the world is not divided up between haves and have nots, as some of the people on my right here on the Labor Party believe. Sorry, you're wrong. The world is divided up into the CEO class—of which a lot of you are members, and a lot on the other side of the chamber are as well, of course. The CEO class runs and owns the world. If they choose to pay themselves $20 million a year, then they pay themselves $20 million a year. They are really answerable to nobody except themselves. Most of the CEOs are paying themselves over $12 million a year, and I'm talking about hundreds of companies in Australia where they are paying themselves that sort of money.
Do they know anything about the stock market? Well, I came through in the age of the mineral boom. My girlfriend, now my wife, bought shares in Toledo copper. She said, 'Would you like to have a look at the prospectus and tell me whether it's a good investment?' Well, they got $6 million off the stock market, and I read through their prospectus. At that stage I was very knowledgeable in that field. I had worked on my own mines and was about to leave university and start working my own mines, so I knew what I was doing. I burst out laughing. She said: 'How much copper have they got? What's the value?' I said, 'I've got more copper in my pocket than they have got in their reserves—it's third rate, $6 million!' At that point in time, I knew that I loved the stock market. It is the greatest invention in human history for smart country boys to take money off dumb rich boys. It is beautiful. I loved it. I was quickly floating my own mining company for $6 million, which is $20 million in terms of today's money, and all these dumb beggars were going to invest. In actual fact, I did have reserves, but they're investing in the stock market. Who's investing?
I read an article by a very famous commentator, Santamaria, one of the most powerful and influential figures in Australian history. He had a column in The Australian newspaper. He said: 'There are people investing in superannuation funds who are earning hundreds of thousands of dollars a year and who are in their 30s. They are investing hundreds of millions of dollars.' I thought: 'This old bloke's lost his marbles. I'm not reading his column anymore.' So I stopped reading it. And then, two years later, Nick Leeson destroyed one of the biggest banks in the world. Santamaria was wrong, because he wasn't in his 30s; he was in his 20s. Santamaria was wrong, because he said they were on hundreds of thousands; he was on millions of dollars a year. Santamaria was wrong, because he said he was investing hundreds of millions of dollars. No, he wasn't; he was investing billions of dollars. So Santamaria was wrong on every single issue! I couldn't believe it. Seriously, this bloke, in his 20s, was investing billions of dollars and paying himself virtually what he liked—millions of dollars a year. Barings Bank had been there for 400 years, and he blew it to pieces. That is what is going on on a continuous basis.
All of your retirement funds are going into superannuation companies that are investing it in the stock market. If you could tell me some young 'smart-A' out of university with a double degree and honours or something like that is investing on the stock market, what the hell would he know about a mining company or its reserves? He couldn't read a prospectus. But that's not really the major part of their investment. Fifty-one per cent of their investment is into the stock market. For those who like studying these things, what you're talking about here is a roulette wheel. These young masters of economics out of business schools in universities wouldn't have a clue what they're investing in. But that's what they're doing: they're investing in the stock market, which is a roulette wheel—well, maybe a Ponzi scheme, because, if they keep investing in it, each year the value of the shares go up because more and more people are buying them each year. So it's a giant Ponzi scheme. But I don't think anyone in this place is so ignorant as not to know what happens in a Ponzi scheme—eventually, it blows up. Fifty-one per cent is going to the Ponzi scheme. Thirty per cent is going into property.
Property may not be a roulette wheel, but it most certainly is a Ponzi scheme. In fact, if we stop the about 400,000 people coming into Australia a year—and now they have stopped—according to what I can see, the property market falls through the floor. What happens then? All your superannuation is invested in the property market. The stock market has collapsed on numerous occasions in Australian history—in the eighties and the nineties—and it will again. So too bad for you if you retire when the stock market has crashed through the floor.
Turn the clock back to when wise men ran this country. Wise and thoughtful people ran this country. They said, '60 per cent went into government securities.' In Queensland, that money was used to build the railway lines into the coalfields. Australia's economy has been carried on the coal truck now for 70 years, and it's still being carried by the coal truck. There's also an iron ore truck as well now. But half of Australia's income is from iron ore and half is from coal. There are also other things, so let me be very specific. Coal's about $70 billion a year. The next one down might be gold, about $12 billion a year; might be cattle, about $12 billion a year; might be aluminium, although that's doomed because of the price of electricity, but it's about $12 billion to $15 billion a year. So you've just got these two giants, and that giant is there because of the 60-40 rule. We could get the investment money to build the railway line for George Ishimura, for Utah and for Les Thiess. Once that railway line was built, we were able to export coal. Australia was a coal-importing nation until that investment money became available and created the coal industry.
Half of Australia's agriculture comes from dams, and if I look at agriculture as a whole I'm talking about $60 billion or $70 billion there. Where does most of that come from? Dams. Where'd the money come from to build the dams? It came from superannuation. Now there's no money for dams because there's no superannuation money. It's all spinning around on the roulette wheel. It's all in the Ponzi schemes. It's not being used by intelligent, thoughtful people to be invested wisely in something that is a benefit to the planet as well as to Australia. We have an aluminium industry because that money was used to build the biggest power station in the world and because we had a government that believed Australia should own the assets.
In Queensland, we took one per cent of the coal for free. We had a reserve resource policy, and God bless the West Australians because they still have a reserve resource policy. We gave away the gas, which is worth about $50 billion or $60 billion a year. We sell it for 6c and we Australians buy our own gas back for $16. That's smart, that was a good deal! Qatar exports the same amount of gas as Australia. Qatar gets $39 billion out of it. Australia gets $4 billion a year out of it. I mean, who's smart, Qatar or Australia?
Honourable members interjecting—
Well, whatever the correct pronunciation is. I'm just an ignorant Cloncurry boy. I wouldn't know about how you pronounce all these big words. This place has decided that people out there can invest that money any way they like. They've got a bunch of nobodies out of university who wouldn't know whether their backside was on fire on a dark night and wouldn't be able to change a bicycle tyre, and yet they are going to decide that this mining investment is a good investment, or that Christopher Skase company is a great investment. They decided that Christopher Skase was a good investment. He flew them in his big Boeing 747 for dinner up on his big yacht at Mooloolaba, and they thought, 'Oh, well, are we going to question him about security for his companies?' Of course they were not. They were impressed by all of this.
I hate to tell you, but your money's going on a roulette wheel and into a Ponzi scheme. I've given the warning. If people don't take it, at least the historical record will read I tried to tell them. The 60-40 rule put there by 'Red Ted' Theodore, put there by Jack McEwen— (Time expired)
I can't entertain you the way that you've just been entertained by the member for Kennedy. His contribution is always worthwhile. He did finish with those immortal words, 'Jack McEwen'. I think he began there and he finished there, and I've enjoyed his contributions to this parliament for as long as I've been here and he's been here. But I do have my own story to tell because, for those of you that are new to this place, I was here when the superannuation scheme in Australia was introduced between 1990 and 1993 by the Keating government, and there's always more to the story.
At that time, we had a leader named John Hewson and a package called Fightback. I had probably 23 people on the staff of the business I was in then. When super was introduced, as far as they were concerned it was the greatest thing that had ever happened. You've got to remember that in those days—before I come to the story—parliamentarians and public servants had superannuation and some of the merchant class in Australia had superannuation directed by their accountants, but overall it was probably only one per cent of Australians that had superannuation. And here was I, as an employer, having to commit to my staff's future. I tell you: my staff loved it. They thought it was the bee's knees, especially when I was paying. They thought it was great. Because all my staff were under a federal award, there was no reduction—they said, 'There'll be a reduction in the pay you give to your employees,' but there was no reduction in pay going to employees. There was just an absolute direct benefit to those employees. When I finished in that business, in 2003, the real benefits of what I'd done over those years were received by the employees that were still there, all those years later.
Superannuation was hailed as an amazing reform for the country. There were those on my side that did not support that type of change to legislation and didn't support small business having to pay for it. We had all the arguments. Yes, there were many on my side that opposed it, but I was living it, which is quite different to standing in this place. I was living it with my staff, and I knew how they felt about this new superannuation scheme.
So Fightback came along, and John Hewson, who I have great regard for now—and he had regard for my wisdom, even at that young age—asked me to stay back a couple of weeks before they released it and said, 'Would you have a look at Fightback, go through it piece by piece and tell me what you think?' I got to the line that said, 'We're abolishing compulsory superannuation.' John came over to us, and I said: 'You can't do this. This is politically not on. My staff love this. They may even be Liberal-National voters; I don't know, but they're not going to enjoy this.' He said, 'The trouble is, Broadbent, you've got no'—I won't mention what he suggested I didn't have. I said, 'Well, if you introduce this you won't have anything.' We had a big discussion about it, and it was taken out of Fightback. So there's always more to the story.
Superannuation continued from that time. We've gone from naught in superannuation for those people to a $3 trillion bucket of money now. I understand what the member for Kennedy is saying about how that money is invested, but a lot of that money is also invested in very good public infrastructure or in major building works, like office buildings, and they are performing well. I have chosen to manage my own super. People still think that every member of parliament gets a superannuation payout when they leave anyway.
Yes, go on. Good one! No. I was there in 2004. I came back in 2004, when somebody out-Latham-ed Latham. The payouts didn't continue. There was a history of them, though, and they were very good for many parliamentarians. What Menzies said when he introduced the scheme was, 'We won't pay you much while you're here, but we'll look after you after you go.' That was the intention. Some politicians I know, after being here for a while, struggled greatly after being in politics, because you're not quite as loved afterwards as people think you will be. Having been here once or twice, I'm quite knowledgeable on these issues.
So we have this system. If you decide that parts of it are not working well, governments have the right to deliver legislation on behalf of who? There is only one group of people that the Liberals and Nationals are interested in here—and I know the Labor Party and the Greens and the Independents are too—that is, the members of those organisations that give their hard-earned into a superannuation fund for the benefit that comes back to them. That's what we're here for. We're here for the people who receive the benefits of the original intent of superannuation. The original intent was not only to give individuals wealth in their older years. It was not only to reduce older people's reliance on the pension. It was to build a fund of money that can be invested in this nation for the benefit of the broader Australian people. For me, they were the three parts to it, and I've never lost sight of where we should be going with it.
Parts of this legislation have been criticised. I was warned by the whip not to criticise anything the government is doing in this particular speech. I got the message and I certainly won't be doing that, so I'll concentrate on the very positive parts of this legislation. The positive parts are what the bill will achieve on behalf of the people that we represent, which are the beneficiaries of superannuation in this nation—all of those people who wouldn't otherwise have the benefit of superannuation.
But there are two sides to the story. There are two sides to every story. When this pandemic hit and the opportunity was given to people to go to their super for a benefit, I know people who had no other alternative but to go to their super. They had no other alternative but to go to their super, and it was a lifesaver for them to be able to go to their super. I'd love to think that in a better world they wouldn't have had to and that there would have been a benefit that would have been supplied to them by the government or their employer or however, but it was a lifesaver for those people to be able to go to their super once or twice during COVID.
Yes, there will be people who have to start all over again from a nil base. But what I like about this is that for the first time the employer can't just shove the money where they want to shove the money or have an agreement with a particular superannuation fund that every default will go to them. They'll actually have to ask: is there somebody that you've already got superannuation money with? It will be up to the employer to find where they're going to put the money for the new employee. Therefore, the benefit accrues to whom? Once again, to the individual person that we're in this parliament for. We're not going to forget that we're not here for the executive officers of these super funds. We're not here for them. We're not here for the benefit of those who work within it. We're not here for them. In fact, we put legislation around that to control what they're doing as best we can, as this legislation does. No, we're actually here for those people who know that they're going get a benefit along the track if the managers of that super fund do the right thing and have them as a focus the whole time—and have some talent and ability to get the best outcome for their clients. That would be their only focus. That's what I'm focused on tonight.
It is suggested that the savings will be $17.9 billion over 10 years. That's almost $5 million of benefits each day with these changes. Every day $5 million more will be going into the pockets of Australians from their efforts. I'm sitting next to another businessman who knows exactly what I'm talking about and who has employed a whole lot of people, as I have. There are very few of us in the House, but we know what it means to our employees. If we can deliver $5 million a day, every day, into the hands of Australians through superannuation, this legislation is worth every bit of the work we put in tonight. It's billions. It's a big, big industry. We want them to manage the funds correctly. This legislation goes to do that. We've taken the challenge to actually make changes to super, where no-one has accepted the challenge in the past because the super managers have said: 'We're too big. You can't touch us. We will tear you to pieces. We have the power. We will take out ads. We will be on 3AW threatening your government. We'll go to every one of our superannuation policyholders or clients and we'll say, "Don't vote for these people, because they're ripping off your super."' I just want to tell the members of those super funds: we're doing this legislation to give you another $5 million every day. Five million dollars every day will go into your super funds, into your pockets, into your future.
And it's not just about them; it's about generations of Australians, especially those that came here after the war and invested in a second house and were so frightened about negative gearing at the last election. As the member for Kennedy knows, that group of people might include construction workers with no skills or farm workers with no skills, but they've still got superannuation. Who is it for? That generation were never worried about themselves. It was always the kids—whether they were Vietnamese, Dutch, Greeks, Italians or Yugoslavs, as they were called in those days. None of you are old enough to remember that. For those people, it was all about their kids. Everything they ever did was about their kids. What we do to our peril, as politicians, is threaten that generation. They're a silent group in our community. They don't make noises. They have festivals and things, but they don't make noises. But they vote. Don't threaten the hard work that they've done over the generations, and super was a part of that. Don't threaten that, because their whole dream was not for themselves; it was for their children and their grandchildren.
I know some of those families—they've actually married into my broader family. They haven't changed. Their focus is still on their children and their grandchildren. Any super they earned they've still got, and they want it to go to the next generation. I know it was designed to be spent while you're alive. Try and tell them that. It's accrued wealth, as far as they're concerned, and it's their accrued wealth. That accrued wealth is to go to their children and grandchildren. They will work as hard as they possibly can, as they did prewar and postwar. They're the people that built this country, and they're watching everything we do when it comes to their finances. Do not threaten them. Thank you for the opportunity to say there's always more to the story.
It is a pleasure to follow the contribution of my colleague and his references to my comments. It is instructive to revisit and to understand better the history of superannuation. Many in this place will know that I had a long career in banking and financial services before I entered this place. I understand this space well and appreciate the importance and value of the superannuation system to our economy. As the member for Kennedy and my colleague have outlined, the importance of superannuation to our economy can't be understated. It is now an investment pool of some $3 trillion, invested in a wide range of assets—in the Australian share market, the property market, cash, fixed interest, international investments, infrastructure, agriculture—I will say I sometimes feel like our superannuation industry doesn't invest enough in our agricultural sector and they could maybe take the opportunity to have a look at some of the very good agricultural assets that have been on the chopping block or the selling block of late and maybe have made a more committed effort to keep those assets in Australian hands rather than see them purchased by foreign entities. That being said, ultimately the importance of what our superannuation industry does is it seeks to provide a hope for the future of Australians, and it's there to complement our age pension system. Whilst the original goal and desire of our superannuation system was to see the reliance on the age pension decline over time, I think our Retirement Income Review has made it quite clear that that's not going to happen to the extent that we thought it would. But it's a combination of those two things that I think is critically important.
This bill, particularly schedule 1, where we're talking about ensuring that a person has a single superannuation fund that is going to be there with them for their lifetime, I think is critically important. In my life prior to coming into this place, I had many an occasion where I had clients come to see me who had multiple superannuation funds. The best I remember was eight. It took us the best part of nine months of work to amalgamate those eight funds into a single fund that the client could then utilise for their future. That involved a number of things, not just looking at amalgamating the balance of the fund but importantly also ensuring that with the insurance policies and other protections that were in those various funds that the client was no worse off, that they kept the same levels of cover, that they weren't paying double premiums—all of those things. What I hope with this legislation and this notion that a person has a single superannuation fund is that we don't see that issue arise again, because all those things do is erode the value and the benefits that those members are going to receive at some point in the future when they retire.
My colleague mentioned in his contribution a saving of some $5 million a day. I think that's an enormous amount to go back into individual members' superannuation funds. But it's also important to reflect on the range of things that this government has done over the past few years to ensure that we're protecting members' superannuation, and it's all designed to ensure that we maximise the benefits to members when they retire. We've sought to strengthen the powers of the regulator to deal with underperforming funds, and that's what this bill is, in part, designed to do. But, in addition, we've capped fees on low-balance accounts, which would help some seven million Australians save around $570 million in fees in the first year alone. We've banned exit fees from all superannuation accounts. I can remember when we were trying to amalgamate those eight funds, there were funds that did charge exit fees, which I think was completely unconscionable. For the first time ever we've provided the ATO with the power to proactively reunite low-balance inactive accounts with active accounts. I note in the contributions of those opposite that they didn't mention that there were some of their industry funds who sought to make those inactive accounts active again so they didn't have to be amalgamated. I also note that those opposite, in their contributions, failed to mention that, when last in government, they imposed some $9 billion of new taxes on super and, going into the last election, they were proposing to introduce an additional $34 billion of superannuation taxes.
Through the work that this government is doing, we are seeking to ensure that the amount of superannuation that people can accumulate is to the maximum benefit for their retirement. The Retirement Income Review, which I referenced earlier, found that the Australian retirement income system is effective and sound and its costs broadly sustainable. But it observed that there is room for improvement. This bill is part of that continuous process of looking to improve the system.
In the government's Your future, Your Super package, we are seeking to ensure that members' superannuation follows them when they change jobs. I've had clients who have had a personal superannuation account and then they've gone to work for another employer and weren't able to use that personal superannuation account that they already had, because the employer was tied, through an employment agreement or other agreement, to a particular superannuation fund. That was not necessarily to the benefit of that member, because in the superannuation fund that they already had set up they probably already had insurances and a range of other measures already in place that were planned and structured for their future, and now they were getting a second fund that didn't have those things or didn't have the capacity to have the levels of cover or other things that they wanted in it for their future.
The bill introduces a new interactive online super comparison tool to empower members to make better decisions about who manages their retirement savings. The YourSuper comparison tool will help members compare and select superannuation products that best meets their needs. Importantly, the bill will hold funds to account for underperforming by introducing an annual performance test. These things are critically important for the future of the superannuation system, but particularly for the future of the members in the superannuation system, because, ultimately that is our focus—ensuring that the superannuation benefits that members are going to receive in retirement are maximised.
I would argue—and I know the shadow minister is sitting at the table—that one of the other ways that members could achieve that is to seek professional advice. But what we in this place can do as legislators is ensure that the regulation for the superannuation system is fit for purpose. Many of the other things that we have done in this place have been about ensuring that we seek to achieve that. For example, in passing the Treasury Laws Amendment (Putting Members' Interests First) Bill, we ensured that those with low balances, below $6,000—often young people who do not really follow their superannuation fund or what's going on in their superannuation fund and get their annual statement and stick it in the bottom drawer and really forget about it—would not face the undue erosion of their superannuation balances through inappropriate insurance arrangements and inappropriate fees and charges. We've seen plenty of examples of that.
I know, from looking at a variety of super funds over the years, that, when you actually look at the statement and it says that you're paying a premium for income protection, total and permanent impairment disability insurance or life insurance, you've got to read the fine print because, even though you may have had that cover in there and you were paying those premiums, that didn't necessarily mean that, in the event of something happening, you could make a claim or that you were eligible to make a claim even though you were paying the premium. So I'm proud of the fact that this government has sought to remove those impediments in the system to people accumulating superannuation balances for their retirement. We should be very proud that we are seeking to protect the value of members' balances.
We've also been making changes to make super more flexible, reflecting the individual circumstances of everyday Australians. These changes will not prevent anyone who wants insurance within their super fund from being able to obtain it, but they need to opt in to obtain it in low-balance and young members accounts. I think that is critically important, because, as I've just touched on, insurance in superannuation will not always be what it's presented as being. We're also ensuring that we're keeping members' interests first and foremost during the coronavirus pandemic by allowing Australians access to their superannuation funds where necessary to get them through the coronavirus pandemic. I think that has been extraordinarily well received. Certainly, the feedback in my electorate of Forde is exactly that. It has allowed people who might otherwise have had to make different decisions receive funds out of their superannuation accounts. I note the comments from those opposite in their contributions that it has left some people with zero balances in their accounts. I acknowledge that, but I think that in the context of the past 12 or 18 months the ability of people to access their super to get them through some very difficult circumstances has been critically important. That's actually not an unusual provision for superannuation, because there are hardship provisions within our superannuation system that allow people in certain circumstances to access a portion of their superannuation to get them through those circumstances.
This bill, as part of the suite of bills that this government has rolled out in relation to superannuation over the past few years, is another piece of the puzzle of ensuring that regulation around super ensures that members of superannuation funds have the opportunity to see the maximum amount of super accumulated during their working life to ensure that, in combination with the age pension, if necessary, they will have the lifestyle in retirement that they wish to achieve. If people are to have a level of financial security without the financial stress and pressure of wondering how they are going to pay for day-to-day living expenses—maybe when they retire they want to buy a new car, upgrade some of their furniture, go on a nice holiday and all those sorts of things—it's critically important that we have a superannuation system, in conjunction with our age pension system where necessary, that gives people the hope and confidence that in their retirement they'll be able to enjoy their retirement and live a lifestyle that they wish to live. I commend this bill and everything else that this government is doing in the superannuation space to the House.
Labor is the party of superannuation. We invented it, and today Australians have $3 trillion in nest eggs for retirement, $3 trillion of economic security for Australians to enjoy after decades of hard work, $3 trillion of investment in the economy, $3 trillion of planning for the future by the Australian Labor Party and $3 trillion defended by the Australian Labor Party. This defence continues in the face of absurd ideology by members of the Morrison government. Why doesn't the Morrison government want to help Australians set themselves up for retirement? Australia has the third-largest pool of retirement savings in the world. As a share of GDP, our private retirement savings outrank the US, the UK and Canada. Why doesn't the Morrison government celebrate these facts?
This bill implements the government's 2021 budget measure Your Future, Your Super. The government claims these measures will enhance the performance of superannuation funds and reduce the number of duplicate accounts in the system. It also implements the government's commitment to action on one of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which recommended that a mechanism be developed to staple members to a single superannuation account. Fundamentally, these aims are commendable and should be pursued. Many Australians lose money due to multiple super accounts established in their name. The government can and should do more to respond to this issue. But, of course, the devil is in the detail, as it so often is with this government, and I'll speak more about that later.
Likewise, improving the performance of super funds should be pursued. No system is perfect, and we should always be looking for ways to make such an important system more productive for Australians who rely on the system to retire well. We know from the Productivity Commission that underperforming funds are costing Australians $3 billion a year. We must fix this. We must ensure Australians are getting the most out of any investment they make in super. But this bill does not do that.
Labor supports the implementation of an objective performance benchmark for superannuation funds, but Labor cannot support this bill being put forward today. As drafted, this bill will damage the superannuation accounts of Australians. It is not in the interests of Australians with a super balance. As usual, Labor has had to put forward amendments to make this bill better. We want to fix this bill. We want to ensure an improved version of this bill succeeds and assists all Australians with superannuation. We want an objective performance test and we want to close down issues with multiple accounts, but we cannot support a bill that staples members to underperforming funds. Treasury has estimated that 21 out of 77 default MySuper funds, covering three million Australians, will fail the benchmark on day one. This means that, if this bill passes, up to three million people will be stapled to a dud fund for life. This is typical of the Morrison government: heralding something as a fix and an improvement but leaving behind millions of Australians—three million Australians, in this case.
The information I just referred to is Treasury's own information—the government's Treasury. But the government have ignored that relevant piece of information in the creation of this bill. And, for the party of liberalism and for the free market, it is very strange that the Morrison government has included in this bill the power for the Treasurer to cancel any investment made by a super fund. Labor cannot support a bill that enables the Treasurer to cancel the investment decisions of a super fund. This destructive move by the government is astounding. The government is frivolously playing with the retirement savings of Australians and also putting at risk the ability of super funds to make prudent investment decisions in the interests of their members. As the member for Grayndler said earlier, this is what you see under totalitarian regimes, not here in Australia.
A clause contained in schedule 3 of the bill gives the Treasurer the power to make a regulation to declare any particular payment or investment made by superannuation fund as not being in the 'best financial interests' of members. This power is not subject to any sort of test and could be used to ban payments that are in the best financial interests of members. This power could be used by any future Treasurer to prevent any particular investment they oppose, and this power has been opposed by Australia's business community, including the Australian Institute of Company Directors. This power will also introduce a sovereign risk element into Australian investment decisions. Investors may be reluctant to invest in Australian assets alongside superannuation funds, with the knowledge that commitments made by superannuation funds could be cancelled at the behest of the Treasurer. Australian superannuation schemes are seen as safe bets by investors around the globe. By taking this power, the Morrison government is putting this at risk. Global investors will look to make investments elsewhere if they know the Treasurer can cancel the investments.
It continues to astound me that the Morrison government hold themselves up a strong economic managers. In fact, they are strong economic meddlers, and this is exactly what they want to do with your super—with the super of all Australian retirees and Australian workers. They are not on your side. The Morrison government want you to lose the vaccine race and now they want to lose the super balance race too. It is astounding and disgraceful.
There are several other problems with this bill. The bill attacks the basis of insurance in superannuation, the industrial default system, meaning that workers in high-risk industries will miss out on insurance tailored to their profession. Non-industrially determined funds often include exclusions in the default insurance packages for high-risk occupations. Our truck drivers, construction workers, police officers, firefighters and health workers deserve better than this move by this regressive government. The government's bill will take effect from 1 July 2021, requiring Australian employers to scramble to implement new systems in less than a month. It's astounding that a government with such a tiny legislative agenda couldn't get its act together to get this through the parliament. The government's bill has huge gaps in coverage. It will only cover default MySuper products, when the vast majority of underperforming funds are concentrated in the choice sector.
The bill introduces new administrative burdens on superannuation funds, tying funds up in red tape, which will ultimately be paid for by fund members through increased administration fees. This comes from a government that goes on and on about eradicating red tape but can't help but create red tape in sectors that they have an ideological aversion to. Why does the Morrison government hate super? It should tick all their boxes—it boosts investment in the economy and enables people to prepare for their own retirements so as to decrease their reliance on the government via the pension and other supports. Instead, this government trashes the super system while also refusing to prepare the pension system so it can support people without adequate superannuation in retirement.
The government hates these funds because they are associated with unions. To me, it makes sense that unions would have an association with super, as they know what workers need and how to support them. The numbers speak for themselves. Industry super funds consistently have lower fees and better returns, not to mention better insurance options, which actually insure for the risks that specific workforces face in their work. Since 2018, the net value of assets in retail super funds has increased by 3.2 per cent, to $645 billion. Over the same period, industry super funds have grown by 30 per cent, to $814 billion. Furthermore, industry funds don't pay dividends to shareholders. Their shareholders are their members, and the numbers demonstrate the benefits of setting up super like this.
Our super system is already contributing more than twice the amount to the retirement of Australians than the pension system is. What would this government do if that were not the case? With an aging population, how is the government preparing for an increased call on the pension system? With this challenge ahead, why are those opposite attacking super? It's because the coalition doesn't like super and has consistently voted against progress in this area. Furthermore, despite having an increase to 12 per cent already legislated, this government refuses to commit to it. It refuses to provide certainty to workers and to business, with continued delays to increases. We know that the current 9.5 per cent is not enough and that Australians will fall short in retirement if that doesn't increase. We also know that businesses need certainty when planning for these increases. Yes, the pandemic has been tough for many businesses, but, as the Treasurer keeps telling us, the recovery is strong. Businesses need to be able to plan with certainty when it comes to how much their wages bill will be. The government's dillydallying on super increases means they cannot do this.
I've spoken about super before in this place, but the following is worth repeating. The government will tell you that super increases suppress wage growth. The superannuation minister, Senator Jane Hume, said that last year. But, according to research from Per Capita, freezing super has previously led to a loss of net income for workers. Per Capita has found that, as a result of the freeze on the superannuation guarantee in 2014 by this government, the average worker has lost over $3,400 in super over the intervening five years. At the same time, their take-home pay has declined by over $1,000 in real terms, giving them a net loss of $5,425. Of course, the Morrison government relies on these lies in its rhetoric on super because it wants you to believe that if it doesn't act on super your wages will go up. The Per Capita research demonstrates that this is not true. The government knows this, but those opposite continue with the lies because they hate super. They don't care about your retirement, and they don't care about your wages either.
We must continue with legislated increases to super. Each year, for the next five years, super will increase by 0.5 per cent, and we must ensure that this happens. It is a conservative approach to help business, workers and Australia's pension system. Unsurprisingly, the Morrison government has missed several other key improvements that are required, the key issue being women's super balances. We know that women retire with less super. On average, it is 20.5 per cent lower than men. Last time I checked, women don't have 20.5 per cent less costs than men in retirement. Women don't want to do 20.5 per cent less things in retirement, and I'd hazard a guess that by the time they end up buying they have less to spend in their retirement.
Whilst that last figure has no basis, it points to the problem at hand: the increased caring responsibilities, including time taken to care for children, mean that women earn less super and have less in retirement. We need to think carefully about how we improve the super balances of Australian women. We need to think about how we can mitigate the effects on super balances when women go on maternity leave, when women take time off to care for their children and when women work part-time in order to balance caring responsibilities. This bill does nothing about this challenge. The government's women's budget did almost nothing about this. The government has said that they will remove the $450 per month threshold under which employers are exempt from paying employees super. Good. They should have done this years ago. But it's not going to help women retire comfortably.
For months prior to the budget, the government was briefing out to journalists that they were going to do something about women's super in the budget. And that was all they did—almost nothing. In fact, they wanted to let women trying to free domestic violence raid their own super accounts. What a disgraceful idea that was, that, thankfully, they dropped. In Senate estimates this week it's been shown that that was actually going to be a saving in their budget. That is shameful—absolutely shameful.
Moving onto the administrative elements of this bill, Labor supports the implementation of an objective performance benchmark for superannuation funds. However, the design of the mechanism proposed by the government is concerning. The proposed performance benchmark could penalise trustees for investing in Australian unlisted assets, such as infrastructure, venture capital or privately owned business. The proposed mechanism would benchmark these long-term investments against international indexes that do not reflect the performance of Australian assets.
The bill also ignores administration fees. The proposed initial design of the measure excludes consideration of administration fees. While the government has indicated that they will fix this, without draft regulations it is impossible to be sure that they will address the issues raised. Administration fees make up the largest proportion of fees paid by superannuation members, and the Productivity Commission identified high administration fees as a key factor causing low returns for superannuation members. Of course, the Morrison government hasn't done the work and have not fixed this, despite the fact that they use admin fees as a key reason why they don't support our superannuation system.
The bill only covers MySuper products and choice products defined as being trustee directed products. This definition has been created exclusively for the purposes of this bill and will exclude a large number of choice products from performance measurement. The definition would appear to exclude a large number of superannuation products that have been identified by the Productivity Commission as being likely to have high fees and low returns. Again, this is sloppy work by the Morrison government.
When it comes to superannuation, this government is not on your side. This is another thinly veiled attack on the superannuation of Australians—which is their own hard-earned money. Labor will always protect our superannuation system.
I have been eagerly anticipating the contributions to this debate on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. It's a very, very important bill for Australians—for the super retirements. But, unfortunately for the Labor Party, the member for Canberra, the previous Labor speaker, has let the cat out of the bag about why Labor is opposing this bill. It's because it is a protection racket—a protection racket run by the Labor Party to protect their union mates and protect the dollars that flow into the unions from the superannuation scheme. That is why the Labor Party want to oppose this particular bill. It's because they want to keep the money flowing into union coffers and to keep their union mates in jobs, and to make sure that that money then flows to the Labor Party. Let's be very, very clear about what this bill is about. It's about having a single default fund that follows you around, it's about making sure that people have better transparency about whether their fund is underperforming, and it's about ensuring that your fund is acting in your best financial interests.
What possible reason could there be to oppose those three very important safeguards for consumers? As the member for Canberra said, it's because they want to keep unions injected into your super. The member for Canberra tried to make the point that everything's better with unions, the world is better when unions are involved. But in fact, some of the behaviour of unions is what has led to this bill. Time and time again we see that these measures are there to safeguard some of our newest employees, those young employees who are new to the workforce and who aren't as focused on their retirement as people who are further along in their career, and understandably so. We get it. There are a lot of competing priorities. You want to start your career, you want to establish your career, you want to start a family. These are more pressing priorities than your superannuation. Unfortunately, because of the way the Labor Party have set up the superannuation scheme, while you're not focusing on your superannuation, the unions are. They're focused on making sure that you have multiple different funds whenever you go to a new job—
because that means more fees. You're quite right, member for Stirling, that means more fees for the union movement. And guess what? When you're not focused, it means the union funds can continue to underperform. They are relying on their members, probably good paid-up members, focusing on other priorities and not looking at their underperforming union super funds. This bill will simply mean that those union funds have to be transparent, so their members know about whether or not they're underperforming. Whether your funds are underperforming will be brought to the members' attention, so that you can make the best decisions for your retirement.
This bill comes back to a fundamental difference between us and the Labor Party, between the Morrison government and the Labor Party members opposite, including the member for Canberra. We know that superannuation is your money. It's your savings, yours to spend and yours to guide as you think best. The Labor Party thinks that it's the Labor Party's money. They think they know how best to spend it, the unions know how best to spend it, the superannuation boards stacked with their union mates and ex-union officials know how best to spend your money, so you best put your money into the super funds, not know whether your fund is underperforming, have your funds diluted by multiple funds through multiple unions because you go from job to job and each union signs you up to a different fund for your different jobs. All this bill does is provide transparency for your funds, for your money, so that you can see it and better guide it, rather than the Labor Party trying to guide it. So I am deeply disappointed, but not surprised, that the Labor Party would choose to oppose this bill because it is what we see from them time and time again. They are on the side of a protection racket for their union mates.
Members on this side of the chamber are on the side of Australians and making sure that they have a secure retirement through control and transparency of their retirement funds. It should be a no-brainer that we would all want Australians to have a secure retirement. This side of the chamber wants them to be able to better plan their retirement and enjoy their retirement in the best possible way. That means having more money in your superannuation. To do this, we need a superannuation scheme. We on this side of the chamber support superannuation very strongly, but we want it to be efficient. We want it to work for Australians. We want it to work for those who are investing their money in it, not work for the vested interests that are set up by the Labor Party. We know that the Labor Party think that the retirement savings of Australians is their cash cow. This is their opportunity to spend it how they want. We saw that at the last election when they were so eager to put the retiree tax on Australians, when they were so eager to put $387 billion worth of taxes on all Australians. The Labor Party think that they know how to spend your money better than you do. We don't.
The facts of what is contained in this bill will provide some very important safeguards and transparency measures for all Australians. When superannuation accounts are automatically opened when employees start a new job or they change jobs—as they often do when they start and they're building their careers and not thinking as eagerly about their retirement savings and growing their retirement savings as people at the end of their careers are—they're holding several accounts. Along with those several accounts, they're getting several sets of premiums and several sets of fees. This bill will stop that. This bill will ensure that your fund travels with you from job to job.
It is ideal, member for Stirling. I take the interjection. It is ideal, because it will allow Australians to better grow their money for retirement even when they are not as engaged with the superannuation system early on in their career. It will be more efficient—
Ms Wells interjecting—
on superannuation funds in retirement. I don't understand how the Labor Party can stand there with a straight face by opposing this bill, essentially saying: 'We're happy for extra fees on the superannuation accounts of Australians. We're happy for the superannuation accounts, particularly of young Australians, to be eroded often down to nothing by fees.'
I also want to talk about the best financial interests duty. This seems to be the one that Labor, the Greens and some of the greener than green independents are hung up on. We know that—
Ms Wells interjecting—
Mr Falinski interjecting—
Thank you very much, Mr Deputy Speaker. I appreciate your protection from the member from Mackellar, who is doing the most interrupting of this particular speech! I'll start again. I was talking about the best financial interests duty, because this seems to be the part of the bill that Labor, the Greens and the even greener independents are hung up on. This is a general principle that there should be very little argument about. Superannuation funds should work in the best financial interests of their members, of the fundholders. It's their money, after all. We keep coming back to this fundamental principle: we know that it's their money. It's the money of Australians; it's not the money of the superannuation funds and the ex-union members which many industry super funds have stacked on their boards. It's not their money to play with. The bill will strengthen enforcement of this obligation by reversing the evidential burden of proof, by creating a regulation-making power to prohibit certain types of payments or investments, by creating a regulation-making power to provide for additional obligations on trustees when making an investment which could be used to avoid their obligation to act in the best financial interests of their members and by making breaches of record-keeping obligations a strict liability offence. When you break it down, which of those could the Labor Party possibly have a problem with?
I also want to talk about the important measures contained in this bill to ensure that Australians have better transparency about whether or not their fund is underperforming. Schedule 2 to the bill will ensure members' retirement savings are protected from underperforming funds by subjecting superannuation products to a new annual performance test. Members who hold a product that fails the test will be notified. This is where it comes back to proactivity: members will be contacted when their product fails the test—that is, that it's underperforming. Products that fail the test for two consecutive years will be closed to new members, protecting members from entering persistently underperforming products. This will end the gravy train, particularly of underperforming funds who continue to underperform.
The reason funds can get away with underperforming is that they are essentially preying on the disinterest of their members. They are preying on their members by continually underperforming and by relying on the hands-off approach, the set-and-forget approach, that many of us apply to superannuation. The introduction of the annual performance test is expected to deliver some $10.7 billion in benefits for members over 10 years. As members, they'll be notified. They'll see that their fund is underperforming over multiple years and they'll be leaving those products. They'll be going to funds that are performing well and they'll be getting higher returns, more money, into their superannuation as a result.
Schedule 2 to the bill will also empower members to make decisions about who manages their savings by requiring the ATO to publish MySuper product ratings on the government's new interactive YourSuper comparison tool. The tool is expected to boost retirement savings by $3.3 billion over 10 years, again, by empowering more members to engage with their superannuation.
This side of the chamber supports superannuation, but we want members to be engaged in it. We want members to have the transparency to better look after their own retirement savings and to have a better plan for their own retirement savings. We would have hoped that there would have been a bipartisan approach to protecting older Australians—protecting all Australians—in terms of making sure that they can retire in a fashion which will enable them to keep up their lifestyle. Unfortunately, it's only this side of the chamber that is pursuing this with gusto. We will do so despite all of the objections of the Labor members opposite, who continue to play politics with the retirement funds of Australians. It may make for good theatre in this chamber for the Labor Party, but all it does is hurt hardworking Australians who are simply trying to fund their retirement, save for their retirement, and are trusting superannuation funds to look after their best interests. For most of the funds, who are looking after their best interests, these obligations will all be very straightforward. For those that are underperforming, that are preying on their members who are less active and less engaged, this will stop that. It will protect Australians.
Under this bill, your savings, your money, your super and your retirement will be more secure and will be better off. The Labor Party want to stop that. This government will deliver it.
What a relief to have that over with! Honestly, I feel like I just heard a 30-second jingle over and over for 15 minutes. I think the member for Ryan has had a passionate commitment to this bill for about 17 minutes, 15 of which he spent on his feet.
Yes, he wasn't even on the speakers list. He speaks of his deep and passionate commitment to the outcomes of superannuation for ordinary Australians, and yet he doesn't appear on the speakers list. Deidre Chambers—what a coincidence! And, yet, for all his passion and commitment to the area, he's vacating the field. See you later!
Mr Falinski interjecting—
They've got a lot of things on, the shadow ministry, not like humble backbenchers.
Mr Falinski interjecting—
I look forward to the member for Mackellar's ongoing contributions to my speech. I'm happy for him to continue to contribute. I welcome all members of their squad and their ongoing contribution to Australian public policy.
Mr Falinski interjecting—
Thank you, Deputy Speaker Vasta. It's such a privilege to serve alongside you in Brisbane, I must say.
Australia's retirement income system is world class. We are ranked third on the Mercer global pension index behind the Netherlands and Denmark. Our success is credited to our three-pillar system made of up of the age pension, voluntary savings and our universal compulsory superannuation system. For most Australians, our superannuation system is the difference between retiring in poverty and retiring comfortably with dignity. It is the difference between being able to afford medication and not being able to. It is the difference between being able to use the heater in your own house in winter and having to rug up in blankets and coats.
The policy decisions that we make today will have a far-reaching impact on what retirement looks like for all hardworking Australians, because a strong superannuation system also means a strong economy. It draws strength from years of stable policy settings that allow trustees to invest in the long term. As we navigate the worse economic recession Australia has seen in a century, our superannuation system can be used as a tool to create financial stability in the market and provide some of the infrastructure investment we desperately need to create jobs. Just look at the benefits superannuation investment has provided in and around my electorate of Lilley, and, may I note, your electorate of Bonner, Deputy Speaker.
Brisbane Airport and the Port of Brisbane are both major infrastructure assets of AustralianSuper. Today the Port of Brisbane supports 4,000 local jobs, and the Brisbane Airport, in my electorate of Lilley, supports nearly 24,000 jobs, including 6,600 aviation jobs specifically. That is, together, 30,000 local jobs which have benefited from the infrastructure investment from superannuation funds. It is nation-building infrastructure, like the Brisbane Airport, like the Port of Brisbane, that this bill hinders.
This bill not only creates instability by weakening the sector; it undermines the system's ability to contribute to our economic recovery. Superannuation is a proud Labor legacy, and we want to make sure that the system is performing in the interests of its members. There is definite room for improvement in our superannuation system. No-one contests that. Gender parity in retirement savings is a significant problem which threatens the economic security of Australian women and sees too many Australian women retire in poverty. The average Queensland woman has almost $55,000 less in superannuation than her male counterpart at retirement. Women over the age of 55 are becoming the fastest-growing cohort of homeless Australians.
There are a few contributing factors to this which the federal government could be addressing. Women are still paid less than men, and in turn that is reflected in their super contributions. Women are also more likely to be employed in casual work and have multiple jobs. This was a barrier until recently, because they had to earn over $450 a week at each job to be entitled to super from each employer, instead of having their overall income for the week considered. Women, on average, spend 12 years less in the full-time workforce than men do, which has a dramatic impact on their super balance. Paying superannuation during paid parental leave could help bridge this gap.
The reality is: this bill, as written, will not implement any of these policy initiatives and it will not deliver better outcomes for Australian superannuation members. In fact, the evidence provided to the Senate inquiry into this bill makes it clear that the government's proposed approach to superannuation will do the exact opposite. This bill will damage retirement outcomes for ordinary Australians and subject our superannuation system, the pride of our country, to considerable risk.
Members before me have highlighted a number of flaws in the design of the stapling mechanism drafted to this bill. Employers will only have two months leeway before they're required to comply with the proposed stapling mechanism. There is no mechanism to ensure that the fund a member is stapled to is a high-performing fund. Workers in high-risk industries may miss out on insurance provisions tailored to their industry, meaning they may not qualify for payments in the event of death or total and permanent disability, a consequence which is extremely concerning to me as a former workers compensation lawyer who saw people injured in a way where they would benefit from those payments every single day.
But there are two key features of this bill that we would like to focus on with our remaining time: the performance mechanism and the best financial interests test. Before that, let me address how this affects us within the current COVID-19 crisis. The COVID-19 crisis presents an opportunity for vision and nation-changing reform that would allow ordinary Australian workers to share in the benefits of success which have recently been handed to the private sector. Week after week, Northside families are struggling to get ahead amid unrelenting underemployment, high unemployment and weak wage growth. Housing affordability is becoming more and more out of reach for ordinary workers, and all the government can offer is policy patchwork and piecemeal interventions that will just end up inflating property prices. We have almost 50 per cent less apprentices in my electorate of Lilley than when the LNP came to power eight long years ago. That is 1,823 high-skilled jobs on the Northside of Brisbane gone. And we still don't have a real, tangible plan to help elderly Australians who are being neglected in our broken private aged-care system.
Instead of focusing on the systemic issues that impact the lives of our constituents every single day, the Morrison government is like a dog chasing its tail, continuing its obsessive ideological attacks on super. We should be in this place focusing our energy and working together to rewrite the rules for the betterment of the people that we represent. We should be making sure that any future economic growth that follows the pandemic is both inclusive and sustainable.
It is time the Morrison government steered the market towards fairer outcomes for all, not just for shareholders and for their corporate interests. Workers in high-risk industries may miss out on insurance provisions tailored to their industry, meaning they may not qualify for payments in the event of death or total permanent disability. Section 117A of this bill delegates significant power to the Treasurer to personally override an investment decision or payment decision made by a superannuation trustee. This power is not subject to any sort of test or oversight.