Raff Ciccone (Victoria, Australian Labor Party) | Hansard source

I rise tonight to speak on the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019. The stated purpose of this bill is to prevent insurance premiums from eroding superannuation balances of members of our community. In particular, it is targeted towards younger Australians and those who already have low superannuation balances. As stated in this chamber earlier today, Labor is supportive of the aim of the bill. However, as mentioned in the report of the Senate Economics Legislation Committee, Labor believes that, in its current form, the bill runs a very serious risk of producing a number of unintended consequences once it is put into effect. In doing so, the bill jeopardises the attainment of its own stated objective if passed through this place without any serious amendment.

I wish to take this opportunity to put on the record a range of concerns that I myself have with this bill, because, indeed, there are significant areas of concern that must be properly considered by members of this place as we debate this proposed piece of legislation. At the heart of our role as a Senate is our own responsibility to protect the interests of our constituents and to ensure they all have the tools and resources that they need to live their lives in a prosperous manner. Insurance to cover yourself and your family to make sure you can continue to keep a roof over your head and food on the table, just in case the worst happens, is absolutely essential for workers, particularly those in high-risk industries.

The insurances we are discussing today, whether they be life insurance, total permanent disability insurance or income protection insurance, need to be easily understood and applied properly and ethically to ensure that coverage and protection can be accessed by every person in our community, whether they need it or not. To be clear, protecting workers from erosion of their superannuation balances is a reasonable goal. I, along with every member of the Labor benches, am committed to helping workers save for a secure retirement. However, I also want to make sure that every member of our community has access to the kind of insurance that will help give them the peace of mind that they and their loved ones will be covered should something go wrong.

In discussing the shortfalls of this bill and potential amendments for its improvement, Labor firmly believes that this bill should exclude workers in occupations that have a high risk of accident and injury. What we're talking about here are workers in construction; transport; agriculture and forestry; nurses; prison workers; paramedics; and police officers, just to name a few. It is absolutely in the best interests of these workers that they have the protection they need and the peace of mind that they and their families deserve.

According to the Australian Council of Trade Unions, around a quarter of workers aged under 25 are employed in these high-risk occupations. Of deep concern to a range of stakeholders is something that should be top of every senator's mind as we consider this bill and which was highlighted by Mine Super in a submission to the Senate inquiry:

• members in these high-risk occupations are often ineligible for retail insurance coverage and are uninsurable outside of group insurance offerings; …

within the superannuation environment.

I'm hugely reluctant to leave workers in high-risk occupations in the situation where they and their loved ones are unable to be covered by life insurance, total and permanent disability insurance or income protection insurance, given the greater risk they face. The timing of this legislation is also cause for concern and something that Labor believes must be changed. The start date is listed as 1 October, which is less than two weeks away. This will place an extraordinary administrative burden on superannuation funds. Representatives from funds that I have spoken with recently have reported to me about the onerous increases in workload following the most recent round of superannuation insurance changes, which commenced earlier this year.

Australian Super also gave evidence to this effect to the inquiry into the bill, telling senators:

…the response from affected members was overwhelming and our expanded contact centre was unable to cope with the volume of calls and provide what we would consider an acceptable service to affected members.

Representatives from Australian Super described the start date as implementable and that this bill would further increase workloads on funds as they notify members, answer member inquiries and ensure that the best interests and the needs of their members are met. It is completely unrealistic to expect that the nation's 500 or so superannuation funds will be able to notify their millions of members and implement a complex series of insurance changes between today and 1 October. In fact, APRA gave evidence to the Senate inquiry into this bill, telling the committee:

Requiring superannuation funds to implement the changes in the required timeframe will pose significant challenges for industry, particularly given the extent and complexity of the changes that will need to be undertaken …

APRA's submission continues:

… it is critical that the PMIF Bill provides for appropriately targeted transitional arrangements that provide superannuation funds with sufficient time to take the necessary steps to implement the reforms in a manner that minimises any unintended consequences, particularly for members.

It would be deeply wrong for us in this place to push through a series of changes that would impact fund members before they had the time to make an informed choice.

I'm very worried that the government is moving to make insurance harder, not easier, to access for people with accounts where there is a balance of less than $6,000. This was not included in the recommendations of the Productivity Commission report, which has been the impetus for this proposed legislation, and there has not been a compelling explanation from the government or the minister for this measure.

I'm also concerned that there has not been careful enough consideration given to the range of reasons why a person may have an inactive superannuation account. A number of stakeholders have raised significant concerns about the adverse impacts of this proposal on a range of account holders well beyond just young workers. The people who fall into this cohort do not often have large amounts of cash at hand, should the worst happen. Rice Warner warned the Senate inquiry into the bill that there would likely be adverse impacts on parents returning to work after the birth of a baby; on those who work part-time, an ever-increasing proportion of the workforce; on new migrants; on those with very little or very low salaries; and on anyone who simply opens a new superannuation account.

The Cancer Council and CanTeen wrote to me last month expressing some very serious concerns about what this legislation will do to young people who are diagnosed with cancer. For the 1,000 young people aged between 15 and 25 years who are diagnosed with cancer each year, the TPD insurance associated with their superannuation may be the only financial support open to them. Further, the letter also said that this was obviously particularly important as we recognise the growing financial toxicity of having cancer. I know a number of senators have raised a range of issues regarding people's stages of life and the importance of having that cover.

Another submission that was made to the inquiry was from the SDA, my former union. The SDA told senators at the inquiry into this bill:

By denying these workers default group insurance, when things go wrong, they will be likely to have to rely on the health and social welfare system.

As a former official of the SDA, I know from working there that a majority of our members are low-income earners. These are people who are earning somewhere around $30,000 to $40,000 a year. Having superannuation that has insurance as part of a collective means that they can afford to have cheap and effective insurance through REST accounts. SDA members mostly contribute their superannuation to REST, and most of them fall within the cohort that's defined in the bill. In 2018, 62 per cent of members of REST were women, and 35 per cent were under the age of 25. While the average account balance is around $26,000, almost half—around 924,000—have balances under $6,000. At the time, the SDA also made mention in the inquiry that more than 880,000 of its members would lose their cover. A year on, many more will be affected.

Insurance is a means of protection, be it financial protection or reimbursement against losses. Superannuation makes sure that those who can't afford insurance in the private sector can get something that is cheap and affordable for them and their families. It allows the risk to be shared amongst those who use it and those who don't. That's what insurance is. But insurance in the superannuation context is designed to assist and support workers who experience unexpected health and wellbeing challenges. The other comparison that can be made—and I think this was part of some other contributions earlier today—is to Medicare. We all chip in, whether we use the health care system or not, but what it does is ensure that all Australians have the ability to access cheap and affordable health care in this country, something we should be very proud of.

As superannuation is an industrial right of workers, it is the most cost-effective method of providing insurance cover for death, total and permanent disability, and income protection. One point nine million Australians are members of REST, and group insurance provides benefits that others just don't.

With a government who refuses to increase Newstart, who isn't afraid to push people off the disability support pension, who is known for deep cuts to Medicare and to health and hospital funding, you do have to wonder why it would seek to move costs for the care of people, when things go wrong, from their insurance provider to the public purse. That strikes me as a bizarre thing for the coalition government to do.

There are people who have less than $6,000 in their superannuation account who, sadly, will have an accident at home on a weekend—people who will fall off the ladder trying to clear out the gutters—who won't be covered by WorkCover, who won't be covered by public liability insurance, who won't be covered for TSC in my home state of Victoria, and who will find themselves without income protection or TPD insurance through their superannuation, because of this bill. What will happen to these people and their families?

One of the unintended consequences of this bill will very likely be upward pressure on premium prices for members who remain covered by the life, TPD and income protection insurance in their superannuation accounts. We are already seeing that now with private health insurance in Australia. As the SDA union submitted to the inquiry on this bill, it is also likely that there will be an increase in premiums across the board as numbers decline. Meanwhile, for the under 25s and the holders of accounts with less than $6,000 who do decide to opt in, their premiums could well be far more expensive than they are currently. The Australian Council of Trade Unions, in their submission, said:

Insurers will look at those who decide to opt-in differently if insurance becomes a choice. If a young person opts-in, insurers call that self-selecting which prompts the insurer to either deny coverage or require underwriting.

The Productivity Commission acknowledges that this group buying power gives account holders better products than they can access in the general market.

Labor will always look to ensure—and, hopefully, through the amendment I will be moving—a fair deal for workers across the country. The ALP has always stood in solidarity with workers. We are the party of 'the light on the hill' and the determination to bring something better to the people: better standards of living. We are the party of the accord, standing on the shoulders of those who sought to make sure Australians could be secure at work and secure in society. We will never stand by and watch workers' rights be ground away, unlike those opposite. We will never stop fighting to make sure that every person who works gets a fair day's pay and is looked after and protected under strong workplace relations laws. And we'll always fight to make sure that workers get the best from their superannuation.

Let's not forget, also, that a number of these superannuation funds are industry super funds. It is interesting to note that a range of senators in this place also have superannuation tied up with industry super funds. It would be interesting to see if they also currently have superannuation insurance cover.

Senator Bragg interjecting—

Senator Bragg, just looking at the register of interests, there are at least 10 senators from the government benches in this place who have superannuation associated with industry super funds, and that is a good thing. But it would be interesting to know if they have insurance also and whether they are willing to opt out or opt in, going forward.

We all respect the fact that, if we all chip in, it will make insurance cheaper in this country for all those who need it the most. We just don't know what is around the corner. I think it's very important to say that, with the packages that are offered by industry super funds, you cannot compete in the general marketplace. On that note, I move the amendment standing in my name, on sheet 8679:

That at the end of the motion, add:

", and the bill be referred to the Economics Legislation Committee for inquiry and report by 11 October 2019."