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

I rise on behalf of the opposition to speak to the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. Labor governments established universal compulsory superannuation, creating a world-class retirement income system for Australia. There is now over $2.5 trillion in our national savings pool, a direct consequence of the success of this system. The system gives working Australians the opportunity to maintain their living standards in retirement. It takes pressure off pension payments and, critical to remember at this time, the national savings pool is an incredibly important source of financial stability. It was an important factor in ensuring that Australia's banking system was well capitalised through the global financial crisis and now, again, the nation's industry superannuation funds are ready to deploy more than $28 billion to worthy infrastructure and property projects as the economy starts to emerge from the COVID-19 lockdown.

You wouldn't know it from the behaviour of the government; their continued petty ideological attacks on the system continue unabated despite the evidence of the significance of the system at this critical economic time for Australia. Unlike the coalition, Labor is unequivocally committed to the success of Australia superannuation system and to supporting changes that will make it stronger and fairer. As presented to the Senate, this bill does not yet meet that test. This is a bill with a long history. The government has been attempting to make these changes for a long time, but the changes are still no more appealing than they were five years ago. This is a measure that was first announced on 20 October 2015 in the government's response to the Financial System Inquiry. The bill reintroduces amendments to the act that were previously introduced in the last parliament, in 2017. That bill, the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill, was not brought on for debate in the Senate prior to the 2019 election.

The bill before us today amends the Superannuation Guarantee (Administration) Act 1992 to require that employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions. The measure applies to new workplace determinations or enterprise agreements made on or after 1 July 2020. I understand that the government considered and rejected applying these same provisions retrospectively on the grounds that such a change would go too far. Well, Labor says that the changes in this bill still go too far.

In part, our position is a response to the evidence that was placed before the Senate Economics Legislation Committee when the bill was referred to that committee for inquiry and report in November 2019. The committee finished its work and reported in March this year. Most of the evidence focused on whether the bill had a positive or negative impact on members by allowing individual choice of superannuation fund. In general, unsurprisingly, submitters supported the broad principle of choice. However, the submissions raised important questions about the practical effects of the legislation on choice and on the overall effectiveness of the system.

At the start of any policy process it's important to ask the question: what problem are we trying to solve? Unfortunately, that basic impulse is not reflected in much of the legislation that is brought before this chamber by the government when it comes to superannuation. Once you've asked that question, it's always good to actually try and clearly define the problem. But in the case of the legislation before us, as with so many previous interventions by this ideological government, it is not exactly clear what problem the government is trying to solve. Industry SuperFunds brought it to the committee's attention that most workers do in fact currently have a choice of fund, citing its 2017 analysis of a sample of enterprise agreements ratified by the Fair Work Commission. They found that 82 per cent of all employees covered by agreements had no restriction on choice of fund and that only 1.9 per cent of the workforce had some form of restriction. The government is yet to clearly explain how changing this system will materially improve the results for individual members or the system overall.

A further issue concerns the way in which workers make choices about their interests within workplaces. The McKell Institute made the argument that, if passed, the bill would effectively inhibit one form of choice—collective or group choice—in favour of another—individual choice—without clear evidence that the latter is more effective in driving better outcomes. The McKell Institute also argued that it would put more Australians at risk of ending up in an underperforming fund and would limit mechanisms for ensuring ongoing accountability of and improved performance by superannuation funds. They're reflecting on the practical experience, which is that the industry superannuation funds have performed very strongly over the history of superannuation. In this regard, collective choice in the real world has been connected to positive performance. It's a reality the government doesn't like to acknowledge because of their highly ideological approach, which prioritises their hostility to worker representation on boards over the empirical evidence about performance. But I don't think they should ignore it in this case.

The Australian Council of Trade Unions also opposes the bill on similar grounds. In the committee process, it argued that the bill is an attack on workers' rights to collectively bargain for a superannuation fund in their interests and it abolishes the ability of workers and their employers to agree to specific benefits only available with single-fund workplaces. Industry SuperFunds also argued for the role of the Fair Work Commission in the system to ensure the quality and appropriateness of funds that receive superannuation contributions on behalf of employees who do not exercise an individual choice.

Labor's dissenting report to the committee's report affirmed our broad commitment to principles around choice, and it made two substantive recommendations for amendments, along with a third recommendation concerning the bill as a whole. The first of these relates to the issue of defined benefit superannuation schemes, and that recommendation arises most directly from the evidence presented by UniSuper. UniSuper believes it is one of the only open private-sector defined benefit funds. Certainly, I'm not aware of any other. Their scheme is essentially entirely dependent on maintaining a very broad take-up across multiple employers within a sector that is defined by relatively high levels of continuity of employment for staff. These circumstances are relatively unique to employees in higher education. In the world of academic research and teaching, these staff frequently spend a career transferring between institutions, undertaking broadly similar roles and experiencing broadly similar working conditions. That membership profile gives UniSuper the stability that allows them to actuarially underwrite a defined benefit scheme.

There is no government or employer guarantee to provide protection for members, so the effect of this bill is to move arrangements for new employees from opt-out to opt-in. This presents particular risks to UniSuper's product. UniSuper described the risk as being grounded in the impact on the salary growth profile of new members and the way in which skewing the average age of new defined benefit scheme members may occur. That in turn could jeopardise their ability to provide the product. As a consequence, Labor has recommended—in the committee process and as proposed amendments here—that the current exemption from choice-of-fund requirements for existing defined benefit members continue and that an exemption for those who are newly eligible to become defined benefit members be provided for in the legislation.

The second recommendation contained in Labor's dissenting report goes to the heart of the topic of the bill: choice. Our amendment is about ensuring that workers retain the choice to bargain for a single fund or bargain for a set of funds where it is determined by the Fair Work Commission that it is in their interests to do so. This is about protecting workers and the rights of workers to collectively determine what is in their best interests. The amendments drafted in response to this recommendation will ensure that, if an enterprise agreement includes a restriction on the choice of superannuation fund or funds available to employees, the Fair Work Commission must be satisfied that the restriction is in the interests of the employees who will be covered by the agreement. This enables consideration of the factors that are essential to the proper functioning of our superannuation system and the protection of workers and members, including safeguards against underpayment and features of proposed default superannuation funds, including matters such as insurance. The final recommendation in the dissenting report is that the bill be passed subject to Labor's proposed amendments. That remains our position.

At the beginning of my contribution, I spoke about Labor's proud history of building the modern system of superannuation in Australia. This is not a history that we share with many of those opposite. For decades now, the coalition, in opposition and in government, has worked to undermine and dismantle a system that has helped bring security and dignity to Australians in retirement. It has reduced the burden on the social security system and supported our national prosperity. Prior to the reforms of the Hawke and Keating governments, superannuation was not something that was widely enjoyed across the community. It was reserved for those who were privileged by their circumstances, usually only highly paid white-collar workers. Very few women were included in the superannuation system. Our reforms changed all this. They opened up superannuation to many more people, and they also opened up the capacity for this sector to invest. Yet those opposite consistently seek to oppose and undermine this system.

On this occasion, Labor is suggesting sensible amendments to address the real-world challenges presented to the committee during our deliberations. With the support of the Senate, these amendments can substantially improve the legislation. Without them, the only option is to oppose the bill.