Peter Whish-Wilson (Tasmania, Australian Greens) | Hansard source

Or the rump. I'll take that interjection from Senator McKim. The bum, the butt—plenty of names that we could add to that. But you get the picture.

What we really have going on when we talk about choice is a proxy war between the group insurers—TAI, AIA, and MetLife, to name a few—and, of course, the retail insurers, the banks and AMP. Who will win out as a result of there being less group insurance? Retail insurers; that's who. The banks and AMP might be losing super customers hand over fist, thanks to the royal commission, and here's the government once again in their corner, opening up the market for life insurance for them.

Senator Bragg interjecting—

Senator Bragg, you'll certainly have your chance to respond.

We don't want opt-in. Another piece of this bill is straight from the back end of a bull, and that's the notion that it's simply changing default insurance from opt-out to opt-in. That's not in case. There's no guarantee that young people seeking to opt in or low-income people seeking to opt in will not be subject to individual underwriting barriers. In fact, I understand the insurance industry itself has made this clear. In other words, someone who is under 25 who wants to opt in and get life insurance may have to pay more than they're currently paying to get cover or may be refused cover altogether, yet they currently have it. Thanks to Mr John Howard, they currently have it.

Here's some advice I received from the Parliamentary Library on this matter. 'Trustees will need to carefully consider their obligations under the insurance covenants to determine whether it is permissible for the members who would like to opt in to be included in the same pool as those who are automatically opted in. Furthermore, trustees will need to determine whether those members who choose to opt in are permitted to do so under the terms of the group insurance policy negotiated between the fund and the insurer. For example, the cost of the policy to the fund may increase as a result of select members opting in, and the trustee would need to determine whether this is consistent with its obligations under the insurance covenants. Where the trustee determines that it is not appropriate, different group insurance policies may be negotiated. Alternatively, insurers may require policies to be individually evaluated and underwritten.' The point was raised during the committee inquiry. It's the point that the government and the crossbench seem to have totally ignored.

I go to the government and crossbench amendment. So what has the government cooked up to get this bill through the Senate today? Here is a little bit of corporate knowledge not going back very far. Some may remember that it was only recently that the Greens voted with the government to get a number of significant improvements on insurance through this place, but we insisted that default insurance not be part of that legislation. I understand that the government did say at the time that their policy was to remove default insurance, and that's why we have this piece of legislation before us today.

This is an amendment apparently to cover high-risk occupations. You may think that the Greens would support this, given what I have just said here today, but it has a number of significant problems. The first problem with this amendment is that it makes a false correlation between group insurance and occupation. It does not help anyone who is not in a high-risk occupation who injures themselves or dies because of something they do outside work. I want to really labour this point about 'outside work'. It was pointed out numerous times when we debated the original piece of legislation that this default insurance is coverage for young and low-income Australians outside of work: when you're up a ladder on the weekend, when you're trying to clean your gutters. It's not for when you are in the workplace, because most workers are covered by other forms of insurance in their workplace. This amendment is kind of redundant, really, if what we're actually looking at is trying to reduce risk for young and vulnerable Australians. If you're a white-collar worker up a ladder on the weekend, this amendment is of no help to you.

What kind of workers could we be talking about? Well, you could be working for the Public Service. You could be a clerk—of course, not a clerk of the Senate, as we have here in the chamber today, but someone who is generally starting out in a low-income occupation. You could be a retail worker. You could be a call centre worker. We can think of a lot of examples of people who aren't going to be covered by this amendment who are going to be vulnerable. For the Senate's interest, we did a quick calculation of the number of workers who aren't going to be covered by the amendment, and it's four-fifths of workers. Four-fifths of young, low-income, vulnerable workers as a cohort aren't going to be covered by this amendment. For a government that is intent on trying to separate the connection between your area of employment, your union and your super, this is a clumsy oversight.

The second problem is that there is currently no definition of a dangerous occupation and, moreover, super funds do not have a record of what occupation their members are actually involved in, something that certainly would be worth senators labouring in committee stage on this bill. This amendment will generate a truckload of paperwork, another thing, Senator Bragg—through you, Deputy President—you may have to bring up at your young Liberals meeting. This is significant red tape—or do we call it blue tape? It can be any colour. What about the guidance notes to board members and the minutes that are going to have to be taken to try to define and track who is working in what occupation and whether it constitutes a dangerous occupation? It is yet more complexity in a system that is already a maze, a system that is already failing, a system that we are trying to fix.

So how do we fix this problem? If the chamber is going to vote to change default super today—which is the position the Greens would like to maintain; which is a position that the Greens forced the government to adopt when the previous legislation came to this parliament—how do we put up an amendment to this bill that actually does protect all young Australians, no matter their occupation? We've got an idea that we'd like the Senate and the chamber to consider. Our amendment will nationalise group insurance for young people and low-income, vulnerable cohorts. The amendment that I have circulated would prohibit members who are under 25 and with a low account balance from being provided group insurance through default superannuation funds and, instead, establish the government as the shadow provider of insurance for these members by assessing and honouring valid claims under the same terms and conditions as would be the case if these members were defaulted into group insurance. In other words, nationalised life insurance for the excluded cohorts as provided for by this bill. There's more to this, Senator Bragg—through you, Deputy President. This would fix the problem of young people having their balances eroded, while ensuring that those who need insurance are still covered. It would also maintain the concept of universal default cover, which was Mr John Howard's idea, which is integral to the provision of affordable insurance through super.

There are a number of ways that the costs of this could be covered. What would the costs be? Just off the cuff, we note from the PBO's assessment that you'd be looking at about $600 million a year on average payouts to high-risk cohorts. That could be borne by the government or it could be provided for on a cost basis. It could be recovered through the ATO or APRA levies, and so paid for by the insurance companies themselves and either partially or fully weighted towards the affected cohort—in other words, business as usual.

I would prefer to see provision of this insurance, on a risk weighted basis, at cost. It would be not for profit—no more gouging of young people by banks and insurance companies. It would be provided by the government at cost on a risk weighted basis. In other words, it could fund itself. There would be no additional cost to the government and yet we would have solved the problem. Even better than that, the at-risk cohorts wouldn't be gouged anymore, because we'd expect that the provision of this insurance through a government default scheme would be a lot cheaper for young, low-income and vulnerable Australians. Either way, it would be at a far lower cost than is currently the case for people under 25 or with less than $6,000 in super.

This position is coming from the Greens today, but I thought I'd read a quote from Mr Michael Roddan, writing in The Australian. I have great respect for him; he's a very, very good financial journalist. I should give a plug to his book, The People vs the Banks. It is a really good run-down on the royal commission and what needs to be done following that royal commission—which, of course, the Greens played a major role in getting through parliament and getting funding for. He wrote:

Instead of workers sending 1 per cent of their wages to companies that show little interest in meeting their responsibilities, the money could be redirected to a national insurance scheme.

Claims could be capped at modest but suitable levels. Death policies would cover funeral costs and liabilities—to a degree—for those without dependants, and then increase depending on the spouse or the number of dependants. Income protection claims could be better regulated to reflect the reality of forgone wages in the event of an injury.

…   …   …

The government wouldn't even have to underwrite a national insurance scheme—

and this is the bit you might like, Senator Bragg—through you, Deputy President—

It could just provide the policy parameters, the administration, and the industry could still take on the risk—and conversely, any reward.

Essentially, there could still be a role for the industry in the provision of that default insurance.

To summarise: this legislation will result in thousands of young Australians who might benefit from group insurance going without. If the government are so sure that people carved out of this bill—young people and low-income Australians—don't need insurance, then they should be prepared to underwrite their risk. I will say that again, because it makes sense. If the government and the crossbench are so sure that young people and low-income Australians, who have been carved out of this bill, don't need insurance, then they should be prepared to underwrite their risk; otherwise, this legislation is just about dismantling group insurance. And who would want to see group insurance disbanded? Follow the money trail! As I mentioned earlier, a number of big businesses would.

The reality is that most people don't pay attention to their super, let alone young people paying attention to group insurance through their super. That's why default insurance through default superannuation was established in the first place. It's a very simple principle. If passed, even with the gerry-up amendments from the crossbench, this bill will result in some of the least well-off people in our society being underinsured. This chamber will be giving assent to that today if it passes this bill. What we do here is real and has real consequences. The Greens have argued consistently that removing default insurance will impact the lives of some of the most vulnerable Australians. I urge the Senate: support the Greens amendments or don't support the bill at all.