Tony Sheldon (NSW, Australian Labor Party) Share this | Hansard source

I rise to speak about the government's Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, in its current form.

False facts, lies and stooges for the banks. Here we are: in the middle of a global health pandemic; unemployment is up by six per cent and possibly on its way to 10 per cent; more than one in 10 workers are underemployed; and we have our first quarter of negative growth in nine years and the beginnings of our first recession in almost 30 years. The media thought the Prime Minister might be on the right track. He called for a new compact—a new accord with workers and employers. He asked for all parties to lay down their arms and proposed a dialogue between workers and employers on proposals to improve our industrial relations scheme. He proposed cooperation to foster prosperity and recovery for Australia.

But instead his government has continued an agenda of ideologically charged hand grenades thrown into the industrial relations landscape to blow away workers' and people's voices—working people's voices. The visions in this bill are wrapped up in the rhetoric of choice and may sound harmless enough. But they are just the latest attempts by the government, block by block, to undermine the most successful worker retirement scheme in the world. The establishment of award based superannuation by the Hawke government was one of the most profound and important economic reforms of the last 30 years. It created a new system for income for workers in retirement and reduced the pressure of an ageing population on the federal budget, all the while creating a huge new pool of capital available to be invested in Australian businesses and infrastructure. And it has never been so important as it is now.

Prior to the development of industry superannuation, most working people only had the pension to rely on. Up until the mid-1980s less than 40 per cent of the working population had superannuation. That figure was even less for blue-collar workers and women, at around 25 per cent. The introduction of the superannuation guarantee charge meant that for the first time many workers would be getting ongoing regular contributions for their retirement incomes. Since that time, industry super funds have become the leading providers of superannuation to Australian workers. More than five million Australians are members of industry super funds, with over $224 billion in funds under management.

Unlike the superannuation schemes run by the big banks and finance businesses, these funds are only to benefit members. They are governed by trustee boards specifically representing employees and employers, and do not pay sales commissions to financial planners. They have sound investment strategies, which include long-term investment in Australian infrastructure. Returns from industry super fund have consistently outperformed private sector funds over many years. Over the last 15 years, the average retail fund has delivered around $36,000 less to their members than the average industry super fund.

The creation of universal superannuation was a signature component of the wages and income accord between the millions of working people and the Commonwealth government. It represents the collective decision of workers to set aside a portion of their wage increases at the time to set up a better retirement for them and their children. And yet the coalition have a history of opposition to this landmark reform. From the Hansard, this is what the Hon. David Connolly, Liberal shadow minister, said when the superannuation guarantee charge was introduced in 1992:

… it is clear that there are no economic, financial or social justifications for the Government's proposals which, if implemented, would cause even higher unemployment, reduce real wages, add to inflation and do nothing to provide genuine retirement income for the majority of Australians.

Was he right? No, he wasn't, and of course he isn't—as they aren't right now. Instead the complete opposite has happened, and the performance of industry funds established at the time has been nothing short of spectacular.

The benefits for individuals and the community have been enormous. The genesis of award based super is critical in understanding why these provisions put forward by the government should be opposed in the current form. It is clear who is behind this attack, who sets the priorities for this government. It's the big banks, the big players in the financial advice industry, and their stooges on the Liberal backbench. It's not a first-order issue we should be debating as we recover from COVID-19. It is petty point-scoring against people coming together to collectively manage people's retirements better than the big banks ever could.

This debate is promoted by the government on the basis that it will give workers choice. The word 'choice' is bandied about by the government like it should end all discussion on this matter. Choice takes many forms in enterprise agreements. It is not an either-or proposition. Some enterprise agreements provide default funds for those who do not nominate one. That is not removing someone's choice. Other enterprise agreements, bargained for and voted on by working people, might limit choice only to select funds that cater to the special needs of that industry, such as insurance or different investment strategies. That is not removing choice.

It is also the question of choice for who. Is it the real choice for the workers or is it the imposed choice of the employer? Is it choice informed in a hypothetical world of perfect information, is it choice pushed onto people by predatory retail funds offering too-good-to-be-true returns and benefits, or is it choice when dodgy employers exercise their choice to force their employees into the fund of their bank's choice?

Research from the McKell Institute's submission to previous inquiries set out the real facts about the impact of choice through enterprise agreements. They inspected a random sample of 3,483 enterprise agreements from 2014 to 2019, as well as 144 awards which had clauses determining fund selection. They then tracked how many workers were being defaulted into poor funds. The results of their analysis was that, critically, employers, employees and unions who collectively bargained for a fund were most likely to select a high-performing fund, and the award process is the second most likely—that is, to be clear, when choice is made through enterprise agreements, more workers go into better-performing funds. That's the research. Those are the facts.

This is in contrast to the shoddy research the government is attempting to use to justify this bill. Documents obtained by my office through freedom of information have revealed the lengths that the government has gone to in order to build a case for the legislation. From the outset, the government intended to attack and slander industry funds with no justification. They provided no performance basis or rationale when selecting several funds for the Attorney-General's Department to investigate. The FOI documents confirm that their sample analysis was never intended as a representative sample but rather a select reading of enterprise agreements tied to the funds the government wanted to go after.

When the government leaked this report to the AFR for a story that appeared on 6 December last year, the department contacted the minister's office to clarify that their research could hardly be considered a report—that it was purely a layman's interpretation and they had not had confirmed at all by employers any of the details of the agreements they investigated. It was a layman's interpretation, they didn't talk with employers and they failed to confirm the details.

When the minister gave his second reading speech in the House he said:

At least 14,000 employees are forced to contribute to one of seven funds identified by Super Consumers Australia as the worst performing funds as a result of the restrictions.

Instead, we found that this is not quite correct. It is unclear when Super Consumers had named those seven funds. Indeed two of them, according to the government department, weren't low performers at all. What's more, Super Consumers went on to confirm in the same AFR article that that didn't consider one of them—TWUSUPER—to be a poorly performing fund at all. Then the minister's office ignored the advice of the department when it came to defining what constituted forced choice. They ignored the department's advice about the superannuation fund provisions in an agreement between the TWU and TNT from 2017 in order to justify that figure of 14,000. So why did the minister tell the House that 14,000 workers were trapped in these funds?

Instead of a policy of transparency, this government has attempted to slander industry super funds with accusations that do not hold up. They have twisted figures and ignored the department in order to inflate numbers to justify the bill. And they have chosen to pin this bill on research that even the department couldn't characterise as rigorous or as a report. For those on the crossbench who care about transparency, if this does not give you cause for concern I don't know what will.

Now, more than ever, we need to ensure we stick with a system that has served us so well. Collective choice agreements, which would be outlawed by this bill, can lead to positive outcomes. They are the result of unions and employers negotiating in good faith arrangements for the choice of funds available to workers. It helps to ensure genuine choice, not the development of a sales culture where bank employees are under pressure to meet targets to sell superannuation products. This collective choice-making is a legitimate and democratic form of choice. The whole workforce benefits and, therefore, you as an individual worker benefit.

Finally, we must consider the role of retail funds in the Australian superannuation industry. We know from the many years of evidence of financial returns that directing workers to retail funds will leave them poorer in retirement. The track record of the banks and the performance of retail funds must be put under the microscope. They are driving the debate and are the biggest beneficiaries of these proposed changes. In its regular rating of superannuation funds, SuperRatings ranked the top 25 super funds over the last decade for a balanced investment option. It does not include a single fund run by a major bank, insurer or master trust.

The banks, of course, have been shown to be incredibly self-interested and Australia has lost count of the number of scandals they've been caught in over the last two years. It is timely to remind the Senate of just some of the headlines describing the behaviour of the banks and for-profit financial institutions: 'CBA agrees it is the gold medallist at fees for no service'; 'Banking royal commission told 90 per cent of financial advisers ignored clients' best interest'; 'AMP executive says company put profits before the law'. That unconscionable behaviour of the banks should not be rewarded by caving into their demands on the issue covered in this legislation. The wolves are at the door and the government wants to kick the door and let them in rather than protect Australian workers and their retirement incomes. The big banks, through their behaviour, should not be allowed to continue to provide superannuation products to Australian consumers. They ripped off so many workers and they've been caught out by regulators too many times. It's time to end their second, third, fourth and fifth chances when it comes to super. It is time to end their involvement in this sector.