Thursday, 18 June 2020
Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019; In Committee
Thank you, Senator Whish-Wilson. I will deal with both of your sets of amendments separately, if you don't mind. On the amendments that you have presented on sheet 8981, which are largely about UniSuper: from what I've seen I think they were in fact drafted by UniSuper, because they approached me with a similar draft. The problem with those amendments is they continue to restrict the choice of fund where an employee is forced into a defined benefit fund. Once a member has set up their account, we want them to be able to choose to exit should they need to. The amendments would prevent an employee from ever choosing to join a different fund if that employee had previously been a defined benefit member under any enterprise agreement; that is a significant failure of the amendments. They permanently strip the right of any person who has ever been a defined benefit member to choose another super fund. We think that is a mistake.
UniSuper's fund is terrific. We have no problems with it. We have no problems with defined benefit funds. Indeed, we'd like people to be able to choose to go into defined benefit funds, and I would like to see a far greater proliferation of those products out there. That said, this bill is about choice, and that's exactly what these amendments deny. In fact, what they're really doing is simply propping up the business model of a fund that should be able to stand on its own two feet and on its merits.
Again, our concern is that people might want to leave; indeed, we have seen many examples where that has in fact been the case. I've had correspondence to my office from one academic, in my home city of Melbourne, who wrote to the government complaining that UniSuper's mandated fees and an automatic insurance premium eroded much of the small balance of superannuation he earned each month, and he wanted to get out but he couldn't. Another employee of a university in Victoria noted that not only was she wasting money on maintenance fees for a UniSuper account she didn't want; she also had to 'battle' with UniSuper by filling out extensive paperwork, enabling her to transfer funds to her main account each year. So it's actually forcing duplication of accounts, which is exactly what we're trying to avoid with this bill.
The other amendments that you have circulated, I should note, are quite similar to an amendment that the opposition put forward yesterday and that was defeated in the chamber. Those amendments, on sheet 8971, are about the removal of the $450 rule. The $450 rule, for those who are not familiar, says that an employer is not compelled to pay superannuation to an employee if they earn less than $450 a month. For those playing along at home, the $450 rule was included in the superannuation system when it first began in 1992; it was a Labor government at that stage.
I agree that looking at the $450 rule merits some consideration. In fact, that's why we've asked the Retirement Income Review to specifically include this in its mandate. The Productivity Commission also recommended it. However, there are some quite significant issues to consider around moving this longstanding threshold. There are implications for small businesses, obviously. But without the implementation of a policy to ensure that members are only defaulted into a superannuation product once, removing that $450 threshold may also result in duplicate low-balance accounts. So the government has agreed to the recommendation of the banking royal commission that a person should only have one default account. As I said, it's under active consideration by the Retirement Income Review. That's due to provide its final report to government in a matter of weeks. We think that should suffice and this is not necessarily the right bill in which to attach that amendment, so we'll be opposing that.