Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) | Hansard source

by leave—I move Labor amendments (1) to (13) on sheet 8764 together:

(1) Schedule 1, item 1, page 3 (line 15), omit "1 July 2019", substitute "1 April 2020".

(2) Schedule 1, item 8, page 7 (lines 5 and 6), omit "1 October 2019", substitute "1 July 2020".

(3) Schedule 1, item 8, page 7 (line 7), omit "1July 2019", substitute "1April 2020".

(4) Schedule 1, item 8, page 7 (line 11), omit "1 July 2019", substitute "1 April 2020".

(5) Schedule 1, item 8, page 7 (line 14), omit "1 August 2019", substitute "1 May 2020".

(6) Schedule 1, item 8, page 7 (line 18), omit "1 October 2019", substitute "1 July 2020".

(7) Schedule 1, item 8, page 7 (line 23), omit "1 July 2019", substitute "1 April 2020".

(8) Schedule 1, item 8, page 8 (line 9), omit "1 July 2019", substitute "1 April 2020".

(9) Schedule 1, item 8, page 8 (line 20), omit "1July 2019", substitute "1April 2020".

(10) Schedule 1, item 8, page 8 (line 24), omit "1 July 2019", substitute "1 April 2020".

(11) Schedule 1, item 8, page 8 (line 27), omit "1 October 2019", substitute "1 July 2020".

(12) Schedule 1, item 8, page 8 (line 30), omit "1 July 2019", substitute "1 April 2020".

(13) Schedule 1, item 9, page 9 (line 13), omit "1 October 2019", substitute "1 July 2020".

These amendments go to the critical issue of time frame for implementation. In particular, they seek to further extend the implementation time frame.

The government has, just now, moved amendments to its own bill, which have shifted implementation deadlines to April. Labor's view is that those ought to be extended to July. That's based on the advice that was received by the committee when it examined this matter. In particular, the Australian Prudential Regulation Authority gave evidence:

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

Whilst Labor's amendments do not go as far as 12 months, we think that the July implementation arrangements would be preferable. That's based on feedback from industry, which sees there is a natural opportunity at the beginning of a financial year to commence the new arrangements; it's on that basis that we're moving these amendments.

It's important to understand how complex it is to implement a reform of this kind and the fact that it does take time to do it properly and to do it well. Industry Super Australia, which is the body that represents all of the industry super funds, provided evidence as follows:

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.

I want to go to that question about renegotiating insurance contracts on reasonable terms. I spoke about this in my second reading contribution. These are complex commercial matters. A negotiation will take time and that is compounded by the fact that the insurance companies will be negotiating with every firm in the industry during this very short window of time. It is not in members' interests that those negotiations be rushed. Trustees ought to have the time that is necessary to engage in robust commercial negotiations with insurance providers so that they can obtain the best deal for their members.

A rushed process doesn't place pressure on the insurance funds, as Senator Bragg erroneously attributed to me yesterday in this place. I'm not concerned about the pressure it might place on the insurance funds; I am concerned about the pressure it places on trustees and the constraints it places on them to pursue the outcomes that they know are in the best interests of their members, consistent with their duties as trustees. It's on that basis that we are making this recommendation for just a little bit more time.

Again, I reiterate my earlier proposition. Labor is trying to make these reforms work. We are broadly on board with the objective of the bill, which is to limit the erosion of member balances. But you have to do this in a practical and workable way and in a way that responds to the real-world conditions of the industry. The advice we are receiving is that time is required to contact members, to engage in that communication process and also to undertake commercial negotiations in relation to group insurance.

AustralianSuper provided very useful evidence to the committee about the impact of the previous round of reforms on their ability to communicate with their members and administer the changes—another round of reforms that were done in an enormously compressed time frame. 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.' That's not in members' interests.

They went on to say:

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.

Similarly, Mine Super gave evidence about the difficulties communicating with workers in regional and remote locations, FIFO workers. It is difficult to reach these people, and a compressed time frame creates the real risk that there won't be adequate communication between funds and their members. It is on that basis that we do urge the government to be flexible in relation to implementation. We've got recommendations from industry that implementation occur at the beginning of the financial year, next year. This seems reasonable and sensible, and it's on that basis that I commend these amendments to the chamber.

The CHAIR: The question is that amendments (1) to (13) on sheet 8764 moved by Senator McAllister be agreed to.