Tim Ayres (NSW, Australian Labor Party) | Hansard source

Before I was interrupted, I was talking about the tight timetable for making submissions to the proposed inquiry. Despite that timetable, 46 submissions were received, including submissions from industry superannuation funds, academics, regulators such as ASIC and APRA, and other interested parties. It is unfortunate that the government-chaired and government-controlled committee did not schedule public hearings to interrogate this written evidence. You would think, given the scope and scale of the changes to superannuation funds, which many millions of Australian workers rely upon for their retirement income, there would be proper scrutiny and a proper process, but that's not the government's purpose here. Instead, the committee resolved to report early, on 23 July. The urgency that apparently was there was not reflected in the government's subsequent actions.

For the past three months, the bill has just sat there as the chamber has considered at length other pressing matters such as the government's Governor-General's address-in-reply, which has gone on now for some months. It is only now that we are debating this bill for the first time. It is unfortunate, because the intervening period could have been fruitfully used by the committee to more fully address the issues raised by stakeholders and for the government members of the committee maybe to learn a thing or two. Concerns about the implementation timetable were raised in the submission of the Australian Prudential Regulation Authority. The deputy chair of APRA said:

APRA considers an appropriate implementation timeframe would be, at minimum, 6 months but preferably 12 months …

Industry Super Australia provided evidence of the impact on behalf of the industry super funds. They said:

If the Government proceeds with the proposed changes, the implementation date is unimplementable and will result in member confusion and detriment. It is proposed that the commencement date of 1 July 2020 would allow funds to renegotiate insurance contracts on reasonable terms, make relevant system changes and properly inform members, but under no circumstances should it be sooner than 6 months after royal assent.

Australian Super gave evidence of the impact of the previous reforms on their ability to communicate with members and to administer the changes. They said:

… due to the short timeframe for removing cover for inactive members, the response from affected members was overwhelming and our expanded contact centre was unable to cope with the volume of calls …

…   …   …

Whilst losing cover may provide significant benefits from not eroding account balances for the majority of members, a failure to make an informed decision to continue cover for members with financial commitments and dependents may have dire financial consequences for those unfortunate enough to die or become disabled.

That evidence was ignored, because of course the government's purpose here isn't to assist people; it is to disrupt the operation of the superannuation funds.

Mine Super gave evidence about the difficulty of communicating with workers in remote areas and about FIFO workers being hard to reach. As a former board member of Mine Super, I can speak about the excellent work that they do, their very sound governance principles and the deep consideration that they give to the efficacy of the superannuation products that they offer to members.

The Financial Services Council also provided evidence of their members' experience in implementing the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill. They said:

… the compressed timeframe for implementing the PYS changes caused confusion among consumers. Following soon after with similar changes may further undermine trust and confidence in the system, particularly given call centres are still receiving enquiries about PYS.

That was probably the government's intention.

Group insurance is a means by which affordable and effective life, income protection, and total and permanent disability insurance can be provided bundled as part of a superannuation account. The bulk purchase of cover means that workers who would otherwise be unable to buy insurance because of cost or their high-risk occupation can gain the benefit of that insurance. Superannuation funds have provided this as a standard benefit. The Productivity Commission found that default insurance premiums significantly eroded the superannuation balance of low-income fund members. In extreme cases, this could amount to up to a quarter of the retirement balance. The Productivity Commission's findings also indicated that the default insurance offerings offered low value to some workers, particularly younger workers. The Productivity Commission acknowledged that the costs and claims ratio for most group insurance products was better than that in the general market. It also acknowledged that some workers would miss out on a benefit if that was not provided through their superannuation fund. That's quite a balanced set of conclusions, but, as I say, the government's not interested in taking account of these issues.

Industry Super Australia advises:

Nearly 30 per cent of workers under 25 years or approximately 340,000 employees, are employed in occupations and industries that are inherently hazardous. Some industries are extraordinarily hazardous. In 2016, half (50%) of worker fatalities occurred within the Transport, postal and warehousing and Agriculture, forestry and fishing industries.

Regarding those who are active low-balance members, Industry Super provided a table that showed that out of 633,159 active members, 25 per cent were in a high-risk job, 64 per cent were with a spouse and/or children and 23 per cent had a mortgage.

Labor is determined to ensure that younger workers are protected from the erosion of their superannuation balance, but, at the same time, this must be balanced with ensuring that workers in those industries have cover they can afford or that they can access. Stripping police, construction workers, firefighters, transport workers and miners of their life insurance through superannuation, which may be the only life insurance they can access, is not a reasonable step. These workers and their families may be faced with devastating hardship if they are unable to access life insurance in the face of a calamity. Workers who put their lives on the line deserve to be able to access affordable insurance that will protect their loved ones in case of need.

As I said earlier, this bill seeks to balance the interest of providing affordable, effective life insurance cover to employees, many of whom would be uninsurable, against the public interest in ensuring that member accounts are not eroded by insurance premiums. Labor supports these objectives, but we have concerns about unintended consequences for members in high-risk occupations, the implementation time frame of the bill and insurance premium increases and long-term impacts.

The Senate committee received 44 submissions. The opposition will move amendments to remedy the defects in the bill, including an amendment to extend the operative date to 1 July 2020 and to protect the benefits of workers in certain high-risk industries. Labor will always look to ensure that workers get a fair deal from their superannuation. The government has rushed through the bill without adequate time to consider these questions. Not a single public hearing has been held.

There is a reasonable balance to be struck here. We want to be able to support the objectives of the bill, but we want there to be a balanced, sensible approach to this set of reforms. On top of these issues, hardly a day goes by when a coalition MP doesn't come out with a new idea to trash the superannuation industry. We've heard from Senator Bragg, the leading light of the coalition backbench on these questions, saying he'd scrap the superannuation system for workers earning under $50,000 a year. This follows on from a gallery of coalition MPs—I think that's the collective noun we're using now—calling for a cut to the superannuation guarantee, including Craig Kelly, Andrew Hastie, Barnaby Joyce and Jason Falinski. None of these people will ever have to trouble themselves worrying about their retirement income, but they're most interested in trashing the retirement incomes of low-income workers.

No-one has the form, though, of the current minister, Senator Hume, when it comes to the coalition's war on industry super. For the minister, it's a holy war—what one may expect if you put a former big-four banker in charge of industry super. Industry superannuation funds, trade unions and Labor form an unholy trinity, the member wrote in a piece earlier this year—unsurprisingly, it was in the Oz—calling for the imposition of retail-fund-style governance on the industry sector. Incapable of conceiving how the system was built and the principles that drive the participants in the system, she regards that as an unholy trinity. It's a line that she's fond of. She also appears to believe that the primary problem in superannuation isn't the massive underperformance of retail super funds, like those at NAB, or the gouging and rip-offs perpetrated by the big banks, AMP or others on retail fund members; it is what she believes are industry super funds' inherent conflicts of interest. She can't drag herself away from that question to deal with the big performance issues in the sector.

Indeed, for Senator Hume the very birth of compulsory super in Australia was evil. She said:

There was an unholy accord, for want of a better expression, between Bill Kelty and Paul Keating back in about 1991 when they decided to introduce compulsory superannuation, rather than a pay rise, for the unionised workforces.

It was not an unholy accord. It was the result of struggle and work to build a retirement income system that members opposite would have found impossible to conceive. The only interest they've got now in the system is to wreck it. Actually, compulsory super was introduced in the 1985 accord, but let's not sweat the small stuff.

Compulsory superannuation was, as Senator Hume said, very hard for employers. Indeed, she insisted that the compulsory superannuation system put a lot of people out of work. To be fair to her, she is yet to go as far as Senator Bragg and others calling for the abolition of the system for some classes of workers. In 2017, in a speech in which Senator Hume claimed that compulsory superannuation had been introduced during the death throes of the Labor government—we thought 1985 was a pretty good year—she argued that the existing industry super governance model, which has delivered returns for members far greater than retail super, was 'entirely irrelevant'; it was 'a legacy of the past'; it suffered from an 'uncritical groupthink mentality'. This is the approach that drives the heart of the coalition's approach to industry super. It's an approach that the community should reject. I think that the Senate, by adopting the Labor amendments, should send the government a message: hands off industry super.