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'm pleased to speak in favour of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 and related bills before us tonight. Senators in this place will know, or should know by now after my having served in this place for two years, that I do not adopt a doctrinaire or ideological approach to the concept of superannuation—far from it. I absolutely do not. Every single Australian worker in this country should expect in a country as wealthy as ours to enjoy a comfortable retirement.
Personally, I'm actually a member of an industry super fund, AustralianSuper. I'm a very happy member of AustralianSuper. They have given me a very good return over a number of years, and I thank Ian Silk and his team. They have absolutely done a great job. I have absolutely no ideological conflict in relation to the concept of superannuation. Every single worker in this country, in a country as wealthy as ours, should have a reasonable expectation for a comfortable retirement. That's important. It's an important equity for this country, absolutely.
Having said that, I want to take three points in relation to this legislation. Senator McKim—and I always listen very carefully to Senator McKim when he speaks—spoke about the issue of ethical investment funds as opposed to other investment funds. The reality is—and I expect that Senator McKim is aware of this—that quite often ethical investment funds actually outperform other investment funds.
Senator McKim interjecting—
Exactly, Senator McKim. You are aware of it. I thought you would be. Hence the best financial interest test should instil no fear whatsoever in investors who want to invest in ethical investment funds. In fact, perhaps the converse is true.
In relation to that, I want to quote some research which Morningstar, a very reputable organisation, conducted that was reported in that extreme right-wing newspaper called The Guardianthat's sarcasm, for the Hansard record—under the heading 'Ethical investments are outperforming traditional funds'. Morningstar compared 745 ethical investment funds against 4,150 traditional funds. They found:
Over 10 years, the average annual return for a sustainable fund invested in large global companies has been 6.9% a year, while a traditionally invested fund has made 6.3% a year.
That's what the evidence suggests. So, as opposed to the rhetoric, when we look at the evidence, those Australians who, as a matter of principle but also as a matter of prudent investment, want to invest in ethical investment funds have absolutely nothing to fear whatsoever from the introduction of a best financial interest test. There is nothing controversial about it.
The second point I want to make is in relation to this concept of a single default fund. Senator McKim again made a very good point—that many Australians do not spend a lot of time reflecting on their superannuation. Too many Australians in this country have too many funds. Instead of having one superannuation account in order to minimise fees and charges, they have multiple accounts. Many times they are not even aware of the multiple funds they have, and many times those workers who have multiple funds are our most vulnerable workers. They're in transient employment; they're not long-term employees of a single employer. So we need to do everything we possibly can to promote the notion that the most prudent and efficient retirement strategy is to have one superannuation fund, to minimise the fees and charges which are taken from the fund. The scheme which is established through this legislation is, again, hardly controversial. Unless you exercise your choice as an employee, your one default fund follows you from job to job. If you choose to change your superannuation fund, then that's your right; you can change your superannuation fund. That is entirely reasonable, and hardly an ideological argument.
My third point is underperformance. The reality is that the evidence is indisputable that there are a number of underperforming funds. As Senator McKim said, too many Australians aren't focused on the performance of their superannuation funds. Perhaps over the last 18 months or so they have been more focused on it. We need to do something to protect workers, to protect all Australians, whose retirement is going to be materially impacted if they are participating in underperforming superannuation funds. That's the third pillar of the reforms introduced by this legislation.
In summary, I'm absolutely no ideologue in relation to superannuation. I want every single Australian to have the opportunity to retire in comfort. There are lots of great people from both the employer side and the employee side involved in industry superannuation funds. I think we can make the system better so that it works better for workers and for all Australians, so that we can provide a better retirement for Australians who work so hard during the course of their lives.