Wednesday, 17 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; Second Reading
The Greens are particularly interested in focusing, in my contribution today in the second reading debate, and also in the committee stage, on the bill's implications for defined benefit schemes and what that means to employees at Australian universities. The amendment under consideration today applies very narrowly to defined benefit schemes currently admitting new members. I understand that there are very few defined benefit schemes still open and admitting new members. This Senate has dealt previously with schemes in relation to Public Service and especially military personnel. The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 has very serious implications for at least one of these schemes, which is UniSuper, who made a number of submissions to the Senate Economics Legislation Committee. While this amendment has narrow application, I should point out an inconsistency in that other defined benefit schemes provided by the Commonwealth, states and territories are not exposed to the same risks. Section 15 of the Superannuation Guarantee (Administration) Regulations 2018 already carves out government schemes.
Without this amendment, from what I know about adverse selection, it seems likely that new employees in the university sector will not be given the chance to join UniSuper's defined benefit scheme. That has implications for the next generation of researchers, scientists and lecturers. I think we all agree in this chamber that the university sector plays a very important role in both public education and world-class research. The Greens have a vision to support a well-funded, high-quality and sustainable university sector. A number of my colleagues have made this contribution over many years—most recently and most eloquently, of course, Senator Faruqi, who is our higher education spokesperson.
I will just provide a little bit of context as to why I'm especially interested in this bill. I myself worked at the University of Tasmania for nearly 10 years, on and off, as a lecturer, including full time in the last couple of years before I came into the Senate. The University of Tasmania has a direct link to this bill today, especially to UniSuper, because UniSuper was actually formulated and established at the University of Tasmania. The Tasmanians in the chamber would be well aware that the University of Tasmania is one of the largest employers in the state. It used to be the biggest employer; at the moment it's the second-biggest employer. Nevertheless, in my home town of Launceston, where my electorate office is, it is the biggest employer. It plays a critical role not just in the economy but also in the community.
I would also like to put on record while I have the opportunity that the Greens are currently campaigning—I know Labor have been supporting us, and I understand there's sympathy from my Tasmanian colleagues—to make sure we have long-term continuity in funding for our scientists and researchers at the University of Western Australia, the Institute for Marine and Antarctic Studies in Hobart, the Australian Antarctic Division and other institutions, to keep the fantastic, world-beating work that they do there going. That funding faces significant uncertainty. It will fall off a cliff in 2022 due to research decisions that have been made recently. That is a critical part of the community in Hobart. We need to make sure we get the government to commit to long-term funding for Australian Antarctic science, Southern Ocean science and, of course, climate science in Tasmania.
We're also very concerned at the moment, given the COVID situation we find ourselves in with this pandemic, that the universities, and university workers and employers, have been particularly hard hit. Universities themselves are facing immense fiscal challenges with a drop-off in international student numbers, and we're not sure when they're going to get that certainty back. We understand it's going to be a very difficult recovery for universities, yet university workers, including casual workers, have been excluded from any kind of stimulus payment by this government. It's made it extremely difficult for university workers. So they face almost a perfect storm of pressures on them at the moment with the risks they face into the future, and we need to do everything we can to help employees at the universities.
We are concerned that this bill, without the amendment that has been circulated in the Senate, piles more uncertainty into a sector already in limbo—a sector fighting to overcome the loss of billions of dollars in income and facing a government determined to avoid its responsibilities to assist this industry at a time of unprecedented crisis. I'm not sure why the government hasn't wanted to assist university workers, but I will say this: it's been really obvious to me in the eight years that I've been in the Senate that the government has continued to reduce funding to universities. They've continued this push for privatisation and commercialisation of universities. We've seen significant job losses at universities right around the country. My brother, who lectures at a major university in Western Australia, is continually talking to me about the pressures that his university has faced over many years in this push to essentially privatise education services. The Greens have often advocated in this place for free higher education to provide exactly what I had when I first went to university, a free degree; to try to give young Australians the certainty they need without their having to pay significant amounts of money back to the government; and, of course, to provide the numbers and the funding that are needed to keep employing staff at these universities.
So not only are universities facing significant uncertainty with major losses of revenue from student enrolments, the inability to access JobKeeper and impending job losses, especially of insecure casual and fixed term workers, but university staff are now facing uncertainty about whether or not they will have access to defined benefit schemes, which have been among the key features of university employment for nearly 40 years. For those following this debate, defined benefit schemes essentially set a guaranteed payment for workers and for staff that will go into their retirement.
Unfortunately this will have flow-on effects for the recruitment of new staff, particularly in the regions and the rural areas. As a Tasmanian, I am acutely aware of the challenges faced in recruiting good staff to regional universities. Getting good people to move to the university has been one of the major challenges in moving the University of Western Australia up the rankings. It's an extremely competitive space. This will make it harder for universities to attract and retain top staff, and it's unhelpful, to say the least.
As I mentioned earlier, I'm proud to note that UniSuper is a Tasmanian led innovation. The fund was conceived by a group of senior administrators at the University of Tasmania in the late 1970s, and the university provided the corporate vehicle to sponsor the establishment of the trustee company known as UniSuper. The provision of a national and fully portable defined benefit scheme has been of considerable assistance to all Australian universities, and this outstanding achievement continues to assist with the recruitment and retention of qualified staff, especially, as I will mention again, in remote and regional parts of our nation.
I'd also like to point out that this amendment is not an exemption from choice. I can see the minister nodding to that. The amendment ensures that all defined benefit schemes are able to operate on similar terms, while ensuring that those fortunate enough to be offered a defined benefit scheme will still be eligible for choice. This amendment allows a contribution to be made in compliance with choice if an enterprise agreement provides for an employee to join a fund for which the relevant person is eligible to become a defined benefit member, and only where the fund's governing rules permit the relevant person, within a period specified, to choose not to remain a defined benefit member and to choose another fund.
When I spoke in this chamber on the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill back in 2018, I expressed concerns about making insurance and superannuation opt-in rather than opt-out. I think the principle applies equally here. Under the proposed amendments, members are able to opt out of defined benefit arrangements within a two-year period. Without these amendments, it is extremely unlikely that anyone will ever be offered a chance to opt in to a defined benefit scheme, owing to the adverse selection risks that have been well documented.
It would be a tragedy if a durable and highly performing fund were sacrificed to an inflexible, one-size-fits-all cookie-cutter all-choice regime. Doing so would deal enormous blows to product diversity in an industry dominated by the same style of largely uniform accumulation-style products. Rejection of this amendment would be all the more ironic, as it would signal the government had opted to deny the choice for defined benefit funds to continue to provide first-class retirement benefits in the best interests of their present and, importantly, future members. No arguments have been advanced that could possibly justify endangering arrangements which have served the higher education sector exceptionally well for many decades. I urge senators to support this amendment.
The Greens have circulated amendments through the chamber. I look forward to talking them and the Labor Party amendment when we go in committee.