Wednesday, 16 June 2021
Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, Treasury Laws Amendment (Your Future, Your Super) Bill 2021; Second Reading
I rise to speak on the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 and the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. Well, here we are yet again—another day in the Senate and another bill about superannuation. The government have an ideological opposition to superannuation that defies rationality. This is in their DNA. As an opposition backbencher in the 1990s, Mr Tony Abbott described superannuation as 'a con'. All that has changed since then is that they have got marginally better, only barely, at disguising their antipathy towards working people and their representatives having a say over their own future.
That is why ordinary Australians listening to this debate ought to be concerned when the government comes in here and does what it's done tonight—that is, to steal into this chamber under the cover of darkness with a dirty deal to extend hours, with no notice. This is a secret deal which no-one in this chamber, at least on this side, has any information about whatsoever. The bills we're debating tonight will not be the bills that proceed to the committee stage, because the crossbench senators who support these bills—that's the only reason they are being rushed through—have done a deal. Those crossbench senators, the ones who voted for the hours motion tonight, need to come into this chamber and explain the deal they have done. If the Senate is about anything, it is about scrutiny and it is about transparency. Without information about the debate that will take place tomorrow, it is very difficult for senators participating in this second reading debate tonight to understand exactly what it is they will be asked to vote on tomorrow, when these bills are crunched through.
But we do know one thing: this government cannot be trusted on super—ever. If you are a high-net-worth Australian with a self-managed superannuation fund, you probably have nothing to worry about. If you are running an underperforming for-profit fund, you probably have nothing to worry about. But working Australians hoping for a decent, dignified retirement have learned by now that the government's endless tinkering with superannuation is motivated by nothing but animus. Instead of focusing on the data and the evidence, these bills, like every other bill on super that's been put before us over the past eight years, enact measures that reflect the hostility of the coalition government to industry super. These people simply cannot bear the idea that working people and their representatives will have control over their own money. It is true that the capacity to direct investments into all corners of the Australian economy confers a power on trustees. So why shouldn't that power be exercised by business and by workers in the interests of the Australian economy?
I had hoped to speak on each of these three bills. There are important matters of detail and of principle that deserve to be aired. But, instead, the government has done what it loves to do—cut down the time for debate and scrutiny in this place. I will start with the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. This is a very poorly drafted bill. It will have adverse consequences for vulnerable Australians, it will damage retirement outcomes for ordinary Australians and it will subject our superannuation system to considerable risk. Stakeholders from the ACTU to the Ai Group and the AIST all raised concerns with this legislation. True to form, the government has failed to even engage with these concerns let alone address them. Labor will be moving amendments to try and remedy the worst of the government's legislation. But without these problems being fixed, Labor stands by these stakeholders in saying that this legislation should not be passed unless its worst aspects are removed.
Let's just have a bit of a talk about the problems. In the House we were able to convince the government to remove a directions power. This was a power that would have given any Treasurer the power to cancel investments that he or she didn't like. This could have been applied to cancel investments in solar power. It could have been applied to cancel investments in coalmines. Even coalition backbenchers were appalled by this power and by the overreach. But in the legislation before us tonight the government have retained a backdoor regulation-making power in the bill that lets them do exactly the same thing by declaring a payment or an investment as not being in the best financial interests of members. For anyone playing along at home, this is in schedule 3, items 2 and 10. Labor's amendments will remove these backdoor regulation-making powers and ensure that funds are only required to act in the best interests of their members, not in the best political interests of the Treasurer of the day.
The government made a commitment to concerned National Party MPs that they'd fixed this problem. They have not. Minister Hume should explain why she is trying to pull one over on her coalition colleagues to give a future Treasurer the power to prevent any particular investment that they choose to oppose—a windfarm perhaps, or maybe a coalmine in a sensitive electorate.
Labor believes that no-one should be stapled to an underperforming fund. Of course, people should be attached to superannuation funds that deliver for them and their family in retirement. That's not what this bill does. One of the very first concerns identified in the economics committee inquiry related to the prospect of up to three million Australians being stapled to underperforming funds. The ACTU has described these provisions as a poor way to achieve the bill's goal.
The Australian Industry Group also raised concerns about the sequencing of the reforms that would see employees stapled to funds prior to being notified if those funds had failed the new performance test. They said:
The approach to reducing multiple accounts is flawed.
Treasury stated that 21 out of the 77 MySuper products are underperforming, and these products hold over $100 billion in assets across three million accounts, charging $1.2 billion in fees annually. Of course, there is also an unknown number of Australians who may be holding underperforming choice accounts. This government's bill completely fails to engage with this problem and raises the prospect of people being stapled to underperforming funds in perpetuity—directly the opposite of what the bill purports to do.
The government also seeks to introduce the best financial interest duty. It imposes a positive duty on superannuation trustees to prove that any particular payment made by a superannuation fund is in the best financial interests of members, with no materiality threshold. The Law Council said of this:
In our view, trustees already have a duty to act in the best interests of members.
The Association of Superannuation Funds of Australia noted:
The risk is that this system will not just create a burden in terms of accounting, documenting, attesting and providing assurance around that; in the absence of a materiality test, it will also see a vast amount of resources and efforts going into documenting, within a very narrow scope, the costs and benefits of every single decision—failing to take account of the cumulative impacts, the interdependencies et cetera.
How can this be a good decision? How can this be a decision that would support a high-performing superannuation sector?
Stakeholders have also raised concerns that the stapling measure may result in workers in high-risk industries missing out on insurance provisions tailored to their industry, and as a result they may not qualify for payments in the event of death or total or permanent disability. The ACTU has commented that the impact is even worse under these proposed laws should the worker be one of the millions who move from a low-risk industry to a high-risk industry. Is there any indication from the government that they intend to fix this problem? No, there is not.
In his second reading speech on this bill the Treasurer said that every Australian should demand the highest level of accountability and performance from their superannuation fund. Hear, hear to that. That's a sentiment that we can all agree on. But the three million members in the for-profit funds who will receive no protection whatsoever from this bill won't meet that test set by the Treasurer for his own legislation, and that is because of the government's insistence of always focusing on the politics and never on the evidence before them.
Finally, this bill will make significant changes to the administration of super in Australia. Every employer around the country is going to need to make changes to their payroll and their employment systems, and super funds will need to make changes to their systems too. Stakeholders across the board have raised concerns about the capacity of all these organisations to be ready for a 1 July commencement, for employers to implement the necessary changes. This bill should not be passed in its current form. If the government were more concerned with protecting Australians' retirement savings and less concerned with prosecuting their ideological agenda they would withdraw it and fix it.
The Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 is also to be crunched through in the hours motion agreed to this evening. This is another bad bill. We know this because it is what countless submitters to the Senate economics legislation inquiry told us. The evidence was that the bill would primarily benefit high-wealth families, could contribute to undermining the industry super sector and could lead to poorer outcomes for Australian retirees. It's very on brand for the Morrison government. It shows a great deal more enthusiasm for measures that loosen the reins on the financial services industry than measures that are designed to protect consumers.
Labor is concerned that one of the biggest beneficiaries of this bill will be unscrupulous financial advisers who are not working in the interests of fund members. You might ask, quite reasonably, exactly whose side is the government on? Evidence provided to the committee also showed that financial advice had been overwhelmingly not in the best interests of clients and did not comply with the requirement that advice be appropriate. That's coming from ASIC, that's coming from the government's own regulatory agencies, and yet the government persists with the bill. They are deaf to the evidence. They continue to bring forward bills like this, bills like the national consumer credit protection amendments—bills that do not put the interests of Australian consumers at the centre of the government's agenda. Labor has made a series of recommendations as part of the Economics Committee inquiry process and you will be surprised to hear they too have not been taken up by this government.
I turn now to the more flexible super bill. At the outset I can confirm that the opposition will be supporting this bill. It makes a series of technical amendments to the operation of our superannuation system. But I want to note a curious point about an amendment that has been circulated. The Pauline Hanson One Nation Party has moved an amendment to this bill to increase the superannuation concessional contribution cap for people aged 67 to $32,500. That all sounds pretty technical doesn't it? This is an issue that is very dear to Senator Hanson. The thing is that many senators breach this cap every year. They usually have to pay thousands of dollars to reconcile their tax bill. This amendment will save senators aged 67 and over a fair bit of money. Can people guess how old Senator Hanson is? Does anyone in this chamber know the answer to that question? I can tell you that Senator Hanson is aged 67. What a coincidence, Deidre Chambers!
In fact, I think she may well be one of the only people who voted for the hours motion. She may well be one of the only people in this chamber who voted for that motion and who will directly benefit from this amendment.
What I am curious about is whether this is part of the deal. If it is, people should come in here and say so, because I will be very interested to see if Senator Hanson's amendment, the one that benefits her directly, will be supported by the government as part of their dirty deal tonight. When it comes to debating super in this place, you can be absolutely certain that it is not the interests of the Australian public that are front of mind for this crowd over there.