Senate debates

Thursday, 18 June 2020

Bills

Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; In Committee

10:51 am

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

by leave—I move Greens amendments (1) to (3) on sheet 8981 together.

(1) Schedule 1, item 6, page 4 (lines 3 and 4), omit the item, substitute:

6 Paragraph 32C(6 ) ( h)

Repeal the paragraph, substitute:

(h) an enterprise agreement:

(i) made before 1 July 2020; or

(ii) to which subsection (6AAA) applies; or

[choice of fund]

(2) Schedule 1, item 7, page 4 (before line 7), before subsection 32C(6AA), insert:

(6AAA) For the purposes of subparagraph (6) (h) (ii), this subsection applies to an enterprise agreement that provides for an employee to join a fund in relation to which:

(a) the employee is eligible to become a defined benefit member; and

(b) either or both of the following are satisfied:

(i) the governing rules of the fund permit the employee, within a period specified within those rules, to choose not to remain a defined benefit member;

(ii) the employee may choose another fund.

[choice of fund]

(3) Schedule 1, page 4 (after line 16), at the end of the Schedule, add:

8 At the end of section 32F

Add:

(4) A fund (the selected fund ) cannot become a chosen fund for an employee or a person who will become an employee under this section if the person has become or is eligible to become a defined benefit member pursuant to an arrangement of the kind referred to in paragraph 32C(6) (h).

9 Subsection 32NA(2)

After "An employer is not required under section 32N to give an employee", insert "or a person who is eligible to become an employee".

10 Paragraph 32NA(2 ) ( a)

After "the employer is making", insert "or will make".

11 Paragraph 32NA(2 ) ( b)

After "the contributions are made", insert "or will be made".

12 Subsection 32NA(9)

After "An employer is not required under section 32N to give an employee", insert "or a person who is eligible to become an employee".

13 Paragraph 32NA(9 ) ( a)

After "the employee is", insert "or will become".

I think it's probably worth, considering there are a number of senators in the chamber, going through what I went through yesterday around the importance of the Greens amendments. There are very few defined benefits schemes that are still open in Australia and admitting new members. This bill has very serious implications for one of them in particular, UniSuper, who made a number of submissions to the Senate's economics committee. I mentioned yesterday that I'm particularly interested in UniSuper because this super fund was more or less born in my home state of Tasmania through the University of Tasmania, which is where it has its origins.

Section 15 of the Superannuation Guarantee (Administration) Regulations 2018 already carves out government schemes, so without these amendments, from what we 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 benefits schemes. I know senators are thinking: well, what's the advantage of a defined benefits scheme? We could probably debate at some merit the pros and cons of defined benefits schemes versus other super schemes. However, it provides choice and, as I mentioned yesterday, it provides a recruitment tool for universities like the University of Western Australia because it can actually guarantee and predetermine returns, which, of course, in difficult times, can be quite attractive for a prospective employee. So it needs to be seen as part of an overall recruitment package.

The University of Tasmania in particular—and we have spent many years trying to attract the right people to move up the rankings of universities, and of course it's a very competitive space—is ranked very highly in some areas of study—for example, Antarctic and Southern Ocean science. The Menzies Institute for Medical Research is globally renowned for the work that it does, but in other faculties we admit that we need to do better to try to attract students and incentivise Tasmanian students to stay in Tasmania especially. That's something I feel, hand on heart, is very important to me as well; I have two children at university at the moment. My daughter is at Melbourne uni but, as a parent, I really wish that she had stayed in Tasmania, and I hope that my son will go to the University of Tasmania next year. But I know it's very competitive to keep students in their home state in Tasmania. So the universities themselves need to be competitive. They need to have good reputations and, of course, the rankings system is very important in that regard. Getting the right staff—the right lecturers and the right researchers, with the reputations and the published research—is critically important if you're going to start that chain of getting in the students and moving up the rankings.

I note the previous vice-chancellor at the university, Peter Rathjen, basically built a giant war chest to recruit some of the best researchers and lecturers anywhere in the world, to try and improve the university's rankings. In the packages that had to be offered, we know that there were significant financial inducements to get the right lecturers and the right researchers. The superannuation scheme is part of that, and being a defined benefits scheme, of course, it's a point of differentiation. I talked a little bit yesterday about UniSuper's defined benefits scheme. It has significant implications for the next generation of researchers, scientists, and lecturers.

The University of Tasmania is one of the largest employers in my home state of Tasmania. Indeed, I think now it's actually the second-largest employer in the state, and in my home town of Launceston it's actually the biggest employer. Let's cut to the chase here: it's been a very difficult time for universities around this country and, indeed, around the world. We know their revenues have dried up as student enrolments have collapsed, and we know that they're under significant pressure. And who bears that pressure? The staff at these universities do. We've had a plague of casualisation across universities. A number of university staff, be they researchers or lecturers or other staff, haven't been able to receive stimulus payments during this terrible period of pandemic. They haven't been able to receive JobKeeper. It deliberately wasn't extended to universities. No matter how many times the Greens and others try to extend JobKeeper to university employees, we haven't been able to achieve that. So they're really under the pump.

The new vice-chancellor at the University of Tasmania, just two weeks ago, made a public announcement about the negotiations with the unions. They are doing everything they can to try and retain their staff. If we make changes today that deny choice to prospective employees at university, that's only going to play against retaining good staff, because it will be extremely competitive. We are concerned that this bill, without the amendment presently before the committee, piles more uncertainty onto 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 responsibility to assist this industry at a time of unprecedented crisis.

Not only are universities facing significant uncertainty with major losses of revenue from student enrolments, but the inability to access JobKeeper payments—as I mentioned before—and impending job losses are making it more and more difficult to work in this sector. Undoubtedly, these kinds of pressures will have flow-on effects for the recruitment of new staff, particularly in the regions—and that's what Tasmania is. It's basically a giant rural electorate with a couple of big country towns, compared to the rest of the country. I'm acutely aware as a Tasmanian of the challenges faced in recruiting good staff to regional universities, as I am of the challenges faced by other businesses in my home state, and making it harder to attract and retain top staff is unhelpful, to say the least. I worked at the university myself for nearly 10 years as a lecturer, and I know that firsthand.

So why is this important, and why are we singling out UniSuper for discussion here?

I mentioned it was a Tasmanian-led innovation. The fund was conceived by a group of senior administrators at the University of Tasmania in the late seventies, and the university provided the corporate vehicle to sponsor the establishment of the trustee company now known as UniSuper, which, I understand, has taken off all around the country. The provision of a national and fully portable defined benefits scheme has been of considerable assistance to Australian universities, and this outstanding achievement, Tasmanian in origin, continues to assist in the recruitment and retention of qualified staff, especially in places like Tasmania.

I'd like to point out, as I did yesterday, that these amendments are not an exemption from choice. The amendments ensure that all defined benefits schemes are able to operate on similar terms while ensuring that those fortunate enough to be offered a defined benefits scheme will still be eligible for choice. It allows a contribution to be made in compliance with choice if an enterprise agreement provides for an employee to join a fund in which the relevant person is eligible to become a defined benefit member, and only when the fund's governing rules permit the relevant person, within a specified period, to choose not to remain a defined benefit member and to choose another fund.

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 anyone will ever be offered the chance to opt in to a defined benefit scheme, owing to the adverse selection risks which have been well documented and which I have outlined in my speech in the second reading debate and again today. It would be largely a tragedy if a durable, high-performing fund were sacrificed to an inflexible one-size-fits-all choice regime. Doing so will deal another blow to product diversity in an industry dominated by the same style of largely uniform accumulation style products. Rejection of these amendments would be ironic, as it would signal that the government had opted to deny defined benefit funds the choice to continue to provide for first-class retirement.

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