Wednesday, 17 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; Second Reading
I too rise to speak on the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019. Labor has a very proud track record when it comes to superannuation and will continue to fight for a stronger and fairer superannuation system. Compulsory superannuation, created by Labor, is a national achievement which sits alongside Medicare and the NDIS as major nation-building reforms. It has made our nation stronger and it's made our society fairer. Prior to the introduction of compulsory superannuation, most Australians only had the aged pension to rely on in their retirement. The introduction of compulsory superannuation was a revolutionary policy and achievement of the Hawke-Keating government. Labor and the union movement fought for and won compulsory employer-paid superannuation. We did this through national worker led campaigns, together with legislative action in this parliament, that today has resulted in a universal workplace right to occupational superannuation. This right was once only available to people like us—politicians, public servants, senior managers and long-serving employees in certain industries such as, let's remember, the banking and financial services industry. As I said, superannuation is a universal right and one that is enjoyed by all people in this building, not just those that sit in this place or in the other place, and it's available across every industry and sector.
Compulsory superannuation has been an incredible success. It provided a new system for funding retirement incomes. This not only creates retirement nest eggs for Australians; the savings are being invested in infrastructure and businesses which are generating wealth and creating jobs. Superannuation assets totalled $2.7 trillion at the end of the March 2020 quarter. Our super system is world class and has created a huge new pool of capital that can invest in Australian business. According to the Willis Towers Watson Global Pension Assets Study 2019, Australia remained the world's fourth-largest pension market, with Australia's superannuation assets rising to 131 per cent of GDP in 2018—up from 67 per cent a decade before. This latest ratio was the second highest among the 22 major pension markets covered by the survey.
We on this side of the chamber know that the Liberal Party has always opposed universal superannuation, and we are seeing it once again today. It was opposed by the then Leader of the Opposition, Mr John Howard, when it was first introduced, and he brought this opposition to government when he became Prime Minister. The Howard government's 1996 decision to abandon the Keating government's 15 per cent superannuation guarantee cost the average Australian worker roughly $250,000 in accumulation over their working life.
Fundamentally, superannuation is still opposed by the Liberals now. The Morrison government has used the COVID-19 crisis as an excuse to escalate the coalition's decades-long ideological war against super in general and industry super in particular. Coalition governments have used every opportunity to undermine superannuation, including the current process that has seen two million Australians resorting to accessing more than $13 billion in personal retirement savings. Why have they been forced to access these savings? Because of the gaping hole in government support.
This government's track record and ideological opposition to industry super funds causes me to be more than a little bit cynical about the reasons behind this bill, let alone its name. We know that those opposite come up with lovely, caring names for their bills. But we know that beneath the first pages of those bills there are often situations where workers are going to be worse off. I believe this bill is just a demonstration, once again, of the ideological opposition to industry super funds that, as I said, those opposite so often convey.
It's interesting to note that the ideological opposition to industry super funds goes even further amongst some members of the Liberal-National party caucus. We've seen Senator Bragg call for all kinds of superannuation to be made voluntary for people earning under $50,000 a year. He was backed up in that call, as the previous speaker, Senator Green, mentioned, by members of his caucus. On 13 November last year, Senator Rennick—yes, that very same senator who said, 'We do not want the hand of government reaching in and taking away our children's youth,' in a debate on early childhood education—called superannuation 'a cancer', stating in his speech:
Millions of dollars gets sucked out of the pockets of the battlers in the bush and sent to the blowhards in Sydney and Melbourne …
Let me just say that, as a cancer survivor, I was horrified to hear that comment. I don't think anybody from any party should refer to a benefit, especially a hard-won and hard-fought-for benefit for workers, as a cancer. I took great umbrage at that comment, and I'm glad to put on the record today how angry—and I was angry—that comment made me and other cancer survivors and cancer sufferers not only throughout my state of Tasmania—I know, because some of them spoke to me about it—but also throughout Australia.
So the government just refused to listen to advice, and that's why they put so much of the hard-earned superannuation savings of Australians at risk. We've seen billions of dollars taken from the accounts of our lowest waged employees. And of course we know that in early May the government was forced to temporarily freeze the scheme because of fraud. The Australian Federal Police have still not ruled out the involvement of organised and offshore crime in this fraud. I'm not quite sure what the government is doing, because they're yet to reveal how many fraudulent claims have been made or what the government is doing to compensate victims after the ATO directed their super fund to make a payment to a fraudulent account. It has also been reported that there is an alarming trend of super funds being plunged directly into online gambling—and we all know that that cannot be good. If true, the embattled government scheme may be boosting the profits of dodgy overseas gambling businesses instead of stimulating the economy and addressing cases of real hardship. But we know that those opposite don't care—and they certainly don't care about super.
I call on the minister responsible and the Prime Minister to come clean with that information that needs to be asked about that fraudulent activity. We've got a government that is intent on attacking workers' wages, their conditions and their ability to better organise for better rights at work. But now it wants to destroy their retirement income. Do you just want everyone to end up on the pension—is that what it's about? I can explain to you that, with an ageing population, that's not going to be a very smart move on your behalf. The rate of the superannuation guarantee has been scheduled to progressively rise to 12 per cent in 2022 but, of course, it was frozen by the Abbott government in 2014. When the superannuation system was designed it was intended that the guarantee would rise. Analysis by Industry Super Australia shows that if the superannuation guarantee moved to 12 per cent, as the last Labor government intended, a 30-year-old male earning $85,000 a year would stand to gain $147,000 from their super by the time they reach retirement—compared with if the super guarantee was frozen at 9½ per cent. Separately, a 30-year-old woman earning $85,000 a year who takes time off work to have children could gain up to $93,000.
In the last 12 months $20 billion of superannuation assets have moved into the not-for-profit sector, with consumers in search of lower fees and higher performance. Choice is already happening. While too many Australians still retire without adequate retirement savings our super system needs to be strengthened and protected, not undermined. It's clear that every move this government makes is to undermine the most successful retirement savings scheme in the world. The bill we are debating today is entirely designed to continue this attack. The government wants to dismantle the system we have in order to advantage the mates of those opposite in the banking sector. Let me be clear: industry funds benefit members, not big banks as those opposite would wish to do. They outperform retail funds again and again. I would like to quote from a report by the McKell Institute. The report states:
… available evidence demonstrates a clear causal relationship between not-for-profit representative governance funds and higher levels of returns for members. Both raw and risk-adjusted research supports the proposition that the two governance models produce significantly different returns for their members.
The report also states:
In 2013, Industry Super Australia concluded that had all superannuation funds returned the 5.7 per cent long-term annual average of not-for-profit funds, Australia’s retirement savings would be $88 billion higher. In 2016, a similar analysis showed that if retail funds had earned the same returns as industry super funds between 1996 and 2015, Australia’s pool of super retirement savings would be roughly $105 billion greater; an increase of more than 5 per cent than the actual situation. Based on these figures, an individual member, with a starting balance of $20,000, could have been $36,000 better off by using an industry fund.
But those opposite want employees to be forced into slickly marketed funds which promise the world but in the end just return super profits to the big banks. They don't really care about choice. As I've said, it's entirely a cover for enriching their mates. They want to ensure that dodgy employers can force employees into the super fund of their bank's choice for the employer's own profit. If they did care about Australians having better retirement savings, they wouldn't have cut the super guarantee in 1996 and 2014 and they wouldn't have Senator Rennick over there saying superannuation is a cancer and should be made voluntary. In fact, they probably shouldn't have him over there at all, with some of the comments he's come out with.
Labor supports choice in superannuation, but we are also committed to making sure every worker is in a high performing fund and that adequate information is available to empower consumers with the information they need to make choices in their best interests. Labor remains concerned that there is a significant risk to defined benefit offerings, which will lessen choice and achieve the opposite objective to what the bill intends.
Labor referred the super choice legislation to the Senate Economics Legislation Committee to ensure the bill had no unforeseen or unintended consequences which left super fund members worse off or with less choice. In their dissenting report, Labor senators noted the ACTU's evidence highlighting the detrimental effects that the bill could have on defined benefit product offerings. The ACTU said:
Should the bill pass, some superannuation funds would need to re-evaluate how and if they could offer their products. UniSuper is one of the best performing super funds in the country. It offers one of the rarest and most valuable retirement products available, which is an open defined-benefits scheme. This is an incredibly generous product which guarantees retirement incomes for life, and that is why the National Tertiary Education Union bargains for this fund for their workers. Its viability is centred on longevity risk of each member and the fact that it is compulsory. If workers were to choose to be a member then this would be evidence of self-selection into the fund and thus would increase the risk of the product failing.
Should the bill pass, the fund could seriously reconsider the offering of the product to its members and potentially close off entry to one of the most beneficial outcomes for hundreds of thousands of members. The ACTU opposes this bill and is seeking amendments which would protect workers in circumstances where they would be better off having a single fund.
Labor also noted evidence from UniSuper, which similarly highlighted the detrimental effect that the bill, unamended, could have on the defined benefit product offering. UniSuper also provided to the committee an amendment that addresses their concerns. Labor will move amendments to address the issues raised by UniSuper relating to defined benefits scheme in order to ensure that the bill does not inadvertently threaten the viability of these schemes.
All of us on this side know that workers are better off as a result of collective bargaining. Industry Super Australia estimates that, of those employees covered by enterprise agreements, only 7.4 per cent have no choice of superannuation fund. This represents just 1.9 per cent of the workforce. (Time expired)