Thursday, 3 June 2021
Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
I would like to also make a contribution to the debate on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Superannuation is pretty significant to our side. It was born out of the labour movement and supported by the trade union movement, all because it supports workers. As I say, superannuation is a legacy of Labor and something we will always defend. I understand, from the second reading speech from the minister, that this is what this bill is all about. If that were the case, we would be fully supporting the bill. Any opportunity to strengthen, improve and make more efficient the management of superannuation funds would always be something that would be supported on this side of politics. But, regrettably, that's not what this bill is all about.
There are a couple of very significant aspects to the bill. For instance, schedule 1 introduces a new system of stapling members to a single superannuation account, replacing the existing delineation based on an industry-determined superannuation default fund system. Regrettably, that could actually see people being stapled to underperforming superannuation funds, but these things I will return to.
Schedule 2 is a new performance management measure that is being introduced, which will see certain superannuation funds benchmarked against matters determined by regulation. You'll see throughout this particular bill that time and time again it refers to regulations—by the way, regulations which have not been finalised yet, have not been set, and not even an exposure draft has been delivered as yet. Who knows what's going to be included in these regulations? I know the member for New England touched upon a very significant aspect that is in schedule 3 of this bill, which requires the trustees to act in the best financial interests of members. This replaces the requirement of acting in the best interests of members. There are some aspects of that which I'd also like to deal with throughout my contribution. But can I just say that this is a classic example of where those opposite return to type.
I know you haven't been here that long, Mr Deputy Speaker Gillespie, but you've been here long enough to know that those on that side have never come out and supported superannuation. They haven't supported increases to superannuation and they didn't support industry superannuation right from the start. Right from the start, this has been opposed. But they have a view—and the member for Goldstein actually reasserts it—that people should be in charge of their own money and spend it as they like, not on making provision for their retirement, because that's a matter for everyone's personal consideration. We on this side primarily want to protect the interests of working Australians. We have an interest in seeing that superannuation provides for a decent and a fundamental retirement income for people. As I say, those opposite are returning to type. They have an ideological obsession. They have never supported universal superannuation, always opposed it, and this is just another step in trying to tie the tail industry superannuation because, as the member for Goldstein made very clear in his contribution, it has been so successful.
Only last week APRA released certain details about the performance of superannuation funds since 2018 in this country. Very interestingly, since 2018 the assets of retail funds have grown by 3.2 per cent, so people have made a decision in terms of retail funds. APRA also showed that over the same period industry fund assets have grown by 30 per cent, so clearly workers are actually voting not so much with their feet but with their hip pocket on where they're going to place their money and who they trust to manage the money on their behalf. It's pretty significant to see what is occurring here. When you look at their ideological attack on industry super, there is no doubt—not even the member for Goldstein doubted this—that industry funds are outperforming retail funds by an extraordinary amount. As a matter of fact, I recall that those on the other side voted 27 times to oppose a royal commission into banking and financial institutions. They were forced kicking and screaming into having this royal commission. What that royal commission found when they looked at superannuation is pretty significant, noting that superannuation should be protected by this parliament. But they found mismanagement, they found abuse of fees, they found underperformance, they found an abuse of insurance aspects of funds. This abuse was not just by a couple of funds charging a couple of dollars but by funds charging billions of dollars. That was a pretty damning and scathing aspect of the royal commission's finding on superannuation. What I didn't say is that that was a finding in respect of retail funds. The fact is that not one of the industry funds was actually called to appear before the royal commission.
There was criticism of one fund. One of the industry funds had a dozen tickets to the tennis, the Australian Open. Despite the mismanagement, the underperformance and the abuse of fees and insurance that occurred in the retail funds, they were criticised for handing out those tickets—tickets to a tennis match compared to the billions of dollars of mismanagement that was found by the royal commission. That shows you why people have decided that industry funds are in their best interests.
When you look at funds such as those administered by AMP or Zurich, over that whole period they were making zero to two per cent. That wasn't working to enable Australian workers and their families to retire with dignity. That's what superannuation has always been about. But the reason the government dislike industry funds so much is that they are supported by that perennial group that always seems to agitate those opposite: the trade unions. It should actually come as no surprise that trade unions don't exist because of the Australian Constitution, that they don't exist because of some predetermined right. They exist to fulfil a need, and that need is to look after workers. The unions are right—and, by the way, I think over probably the last 50 years or so one of the standouts of what trade unions have delivered in this country has been superannuation.
When I started work—no doubt, Deputy Speaker Gillespie, at a similar time that you might have started—superannuation was for public servants. It would have been for police officers and others in the public sector, but it certainly wasn't for blue-collar workers. What we now have is universal superannuation that's available to everybody. I think one of the standout contributions of the trade union movement and the labour movement was to fully embrace the universal aspects of superannuation.
In terms of the issues of power and balance, as I said at the start, most of the regulatory aspects of this are not before this parliament. They're not contained in primary legislation. They're all going to be in some form of regulation yet to be developed. An example of that is schedule 3, which includes the power to allow the Treasurer to determine any particular type of payment that is not in the best financial interests of members. Ordinarily, people would probably say, 'That's fair enough.' But, like others in this place, I've had some discussions about it with a few people who have a very clear idea about what is in the best interests of people. One of those was Gerard Dwyer. He is the general secretary of the SDA, the Shop, Distributive and Allied Employees Association. He noted that this bill could cost his members pretty dearly in terms of their retirement balances, and he went on to say that it could damage local economies. The point he made to me was this: members of his union predominantly reside outside the capital cities; they're mainly outside urban areas, in regional towns and rural communities. In talking about his own members in those communities, he said that the things that were in the best interests of people there were roads, rail lines and access to airports. He points to investment in agricultural enterprise, because his members are largely involved in retail, fast food and other areas which rely on the agricultural industry. Not being able to invest in a product like an agricultural enterprise, because it might not have the biggest turnover in the next 12 months, would have a detrimental impact on not only his members and their interests and their families' interests, but the local economy, because things such as airports or agricultural enterprises or rail lines et cetera—they are unlisted assets. It would be more permissible under this arrangement, in the best financial interests, to invest in overseas assets—not assets in this country but overseas assets; not benefiting local communities—because that might give you a better return in 12 months than over five years. So this is where the trustees really do need to look at what's in the best interests of members and not confine it to the short-term best financial interests, which do not have any time aspect or any aspect in terms of community.
There is no doubt that what this piece of legislation is seeking to do is put unprecedented powers with the Treasurer. This is the mob, over there, of sports rorts. It's the same people who delivered the rorts around the safer communities program. We saw the amount of pork-barrelling that went on in terms of their targeted marginal seats. And this is the mob that says, 'Trust us.' You can't trust a trustee of one of these industry funds, because they're not elected by a whole community, but 'Trust the Treasurer; he'll do it for you.' These are the people who delivered rorts on such a scale that we do need to have the oversight of an integrity commission, and they're saying to us, 'You can trust us with your financial future.' They want not simply access to direct superannuation; they want to be able to direct the investments of superannuation accounts and to be able to indicate where superannuation moneys can be invested and where they can not.
This is a last-ditch effort by this government really to constrain industry superannuation investment by directing and diverting investments to asset classes or projects as it sees fit. This is something that they would criticise if it were happening in some foreign jurisdiction that we have a free trade agreement with—that doesn't particularly like us at the moment—because, they'd say, it's a Communist country. But the government want totalitarian aspects in this legislation so they can ride roughshod over billions of dollars of investment which solely goes to the benefit of workers and their families.
If this were genuinely a piece of legislation to improve superannuation, Labor would be all-out supporting it and advocating it—we will always stand up for improvements in legislation—but this is one where we cannot. The member for Cowper, who is arriving in the chamber—and I do pay respect to his former occupation as a police officer—would know that one of the aspects of some of our superannuation funds is to make superannuation appropriate and affordable, consistent with and appropriate to the industry that people work in. Being a police officer, as the member for Dickson and the member for La Trobe also know, is a very dangerous occupation. Try and get private insurance in those areas; it would be absolutely prohibitive—similarly, in areas such as transport and construction. But these are aspects that actually flow from being able to have a superannuation fund that can make decisions in the best interests of its members and not just confine itself to their best financial interests.
I rise to speak on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. I think we in this place all know that superannuation is the most important legislative instrument available to working Australians to secure their financial independence in retirement. We all want our friends and family to live comfortably in retirement, and any changes that seek to increase the funds available to retirees should be viewed positively. This bill, on balance, addresses many of the deficiencies in the current legislation that have a concerning effect on retirement incomes. However, I think it's really important to say that it's not perfect, and I believe consideration should be given to sensible amendments that would maintain the intent of the government's proposed reform.
Minimising the number of superannuation accounts held by an individual is necessary, and the proposed stapling provision will no doubt bring about a reduction in the number of funds held. My concern with this provision is that many employees may end up with a poor-performing stapled fund. This concern has been raised by many entities and has been the subject of many submissions that called for sequencing to eliminate poor-performing funds before the stapling scheme commences. Such a change is simple and strengthens the provision without any consequence for fund members. I think that that is an issue that should be considered very carefully in the other place. It's really about provision of time. I think that, while this chamber does much good work, we all need to acknowledge that it's the other place that really does peel the onion of bills and takes the time to go through them step by step. So I would really urge the government to look to the Senate to address that particular issue.
The annual performance test will find great levels of support by fund members, who reasonably expect their funds to hold up to scrutiny, and that may help them in comparing their fund's performance against other funds. What I don't understand, however, is why the government has chosen to restrict the performance test to the MySuper segment. All superannuation products should be the subject of an annual performance test. When I met with the minister, I spoke to the minister about this. I think there is a reasonable expectation in this place that we should have one rule that covers everyone. According to some in this place, one or more contentious components of the bill relate to the best financial interest provisions. I strongly believe that superannuation funds must be accountable and that the decisions of the funds should always be made in the best financial interests of members.
Third-party payments for ideological or political purposes—or any other purpose, for that matter—that are not in the best financial interests of members shouldn't be occurring. It's disappointing that we have a need to legislate in this place to protect members' funds from inappropriate payments. I can't understand why a super fund would think it appropriate to make political donations, advertise at a sporting event or hire a corporate box, particularly when we are talking about a compulsory payment. We're not talking about some kind of discretionary spend; we're talking about something compulsory. So I don't think any of those expenses actually benefit the members.
My concern with the bill is that having a unilateral approach without a financial threshold will impose unnecessary administration costs on the fund which ultimately may reduce financial returns for members. I think it's fair that we would expect the operations of a super fund to have expenses, such as their employees and just the day-to-day running of an office. But I think, when we're looking at those extravagant advertising deals and when we're looking at those extravagant purchases—as I said, around corporate boxes and the like—they should be curtailed. Certainly not a dollar from any superannuation company should be going into this place by way of political donations to any party. Effectively it is the desire to improve fund expenditure. The total cost may potentially be greater than the payments the legislation seeks to mitigate.
All too often in this place we see an ideological divide on superannuation legislation and, consequently, an unpreparedness to assess on merit. I think this is certainly the case with this legislation and is compounded by the vested interests of superannuation funds. I'm pleased that the government has removed the directions power which would otherwise have given any government of the day the ability to dictate what investments a superannuation fund may or may not invest in. This was an overreach, and its removal was appropriate. It was my most concerning aspect with respect to this proposed legislation.
In determining my position on the bill, I have sought advice from the government and the opposition. They've found what I think to be the most helpful of advice, that being the independent analysis by groups such as Choice undertaken through partnership with Super Consumers Australia. I think it's really important for people who are following the Hansard that I've read out a quote from Super Consumers Australia. They said:
Holistically, this package will benefit superannuation consumers and it is important its measures are considered as a whole and not in isolation. A number of industry submissions have embarked on self-preservation, hiding behind the veil of alleged widespread consumer harm. Much of this analysis fails to recognise the intersecting impact of each of the measures and the failures of the current superannuation system.
I think that is a big problem in this place, in particular around superannuation. Every single time we debate just the tiniest of bills, it is highly contentious—and it really shouldn't be. What I do as a crossbencher is try and find sources where we know that there isn't a vested interest in providing advice.
We should all seek to improve the financial returns of the superannuation funds for the millions of hardworking Australians. So I give my qualified support for this bill, with the assurance that amendments will be made in the other place to improve this bill and address the concerns that I have raised today.
I want to thank all of the members who have contributed to this debate on the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. The Morrison government's Your Future, Your Super package, as has been very well outlined, will implement a number of key recommendations from the Productivity Commission review into superannuation and the royal commission into misconduct in the banking, super and financial services industry, which has also been referred to.
Your Future, Your Super makes the superannuation system better in a range of ways, a number of which have been outlined here today. There are four key ways that it will do so. These changes will prevent the creation of unintended multiple superannuation accounts; empower members by making it easier for them to choose a well-performing product that meets their needs; hold funds to account for underperformance, protecting Australians from poor outcomes and encouraging funds to lower costs and fees to boost Australians' retirement incomes; increase transparency and accountability for our superannuation funds in how they use their members' savings; and, importantly, will save Australians nearly $18 billion over 10 years—saving more of their contributions and ensuring that those contributions are able to be put to use in their retirement, which is what the entire system is for.
This is our next step in what has been a really important process of modernising and improving Australia's superannuation system to make sure it's working harder for the people for whom it has been put in place. There is no doubt, as has been highlighted, that any changes to superannuation are highly contested and highly contentious. But the Morrison government has as our guiding light in this respect the aim of ensuring that members' contributions are absolutely put to the best use for those members and ensuring that the men and women who are entrusted with those funds have as their only key obligation how they can maximise the returns for those Australians. So in that respect it is unusual, in my view, that sensible reforms like this are so highly contested. Contesting changes that will assist everyday Australians—Australians who, in many cases are on low incomes and who have the aspiration of getting to their retirement without having to rely on the government and are therefore relying on their superannuation—to put their savings to work and that place obligations on funds to do is unusual.